Students take pay cuts for prestigious medical residencies, study shows

Medical resident wages are almost half of physician assistant wages because there is greater demand than supply of prestigious spots, according to a study from MIT economist Nikhil Agarwal, PhD, which was featured in The Wall Street Journal.

Students are willing to pay an "implicit tuition," according to Dr. Agarwal, to complete their residencies at prestigious organizations, which brings down the salaries of all residencies by an average of $23,000 annually. On average, a medical resident makes $47,000 a year, according to Dr. Agarwal. This is almost $40,000 less than the average physician assistant makes each year.

Dr. Agarwal's work studies the algorithm used to match students to medical residencies, which some say depresses resident salaries and violates antitrust laws. His work suggests low resident salaries are instead due to the high demand of the prestigious residencies.

"The matching algorithm results in very efficient allocations and a very timely and well-functional market, but people have been resistant to using it because of this issue — they fear that it might negatively affect salaries," Dr. Agarwal told The Wall Street Journal. "After this paper, we learned that the fact that salaries are low in the medical residency market has nothing to do with the algorithm itself. Rather, it's because of fundamental economic forces, like the limited number of positions at fantastic hospitals."

 

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