A spatial hedonic analysis of veterinarian incomes

Veterinarian incomes have consistently lagged behind those of other professionals with similar levels of education. However, observations of veterinarians earning incomes equal to those of other health professionals has initiated a movement within the veterinary community of identifying factors that influence veterinarian income. Within the veterinarian population disparities in income between different types of practices and between the genders have been identified. However, these analyses have not controlled for other factors such as hours worked, equity, experience, etc. Little, if any, economic analysis has been performed in the area of veterinary economics. The studies that have been performed have been simple means studies and surveys of business practices. The question the veterinary community is pursuing to answer is: "What are the controllable factors that influence veterinarian income?"; The problem is formulated and equations specified such that the notable income differences can be delineated from those of other factors in a hedonic framework. Due to the potential for relationships between practice type and practice location and resulting spatial dependence, spatial relationships are considered and evaluated in this analysis. To test for spatial dependence, a spatial analysis of veterinarian incomes is conducted within a hedonic framework.; A hedonic model of veterinarian income is estimated using Ordinary Least Squares (OLS). Spatial diagnostic Lagrange Multiplier (LM) tests were calculated from the OLS results for spatial dependence in the form of both spatial error and spatial lag. Spatial lag and error models were then estimated. The spatial models utilized an exponential distance decay function to assign spatial weights between each pair of observations. The rate of spatial decay with respect to distance was then optimized for both the spatial lag and spatial error models with an iterative grid search process. This optimization allows inferences to be made regarding the size of the market or competitive region within which the incomes of veterinarians are correlated due to market competition. The consideration of spatial dependence allows the estimation of efficient and unbiased parameters in the presence of spatial dependence, therefore achieving efficient unbiased parameter estimates of the factors affecting veterinarian income.; Empirical results indicate that spatial dependence is statistically significant in private practice, government, and industry employment subsets. The private practice and industry subsets were characterized by spatial lag dependence, while the government employment subset was characterized by spatial error dependence. Spatial dependence was not statistically significant in the university employed subset. The optimal decay parameters for private practice owners and associates indicated that the size of the market in which owners' incomes are determined may be relatively small compared to the size of the market in which associates' incomes are determined. Further research is necessary to more closely analyze the differences in market size observed in this analysis.; Empirical results indicate there are income differences between practice types, the differences are relatively small among associates compared to owners. Female veterinarians were found to earn less than their male counterparts in private practice and at universities (P=0.05), however the government and industry female veterinarians do not lag significantly behind their male counterparts.