The returns to medical school in a regulated labor market: evidence from admission lotteries

We estimate the returns to medical school by exploiting that admittance to medical school in the Netherlands is determined by a lottery. Using data from up to 21 years after the lottery, we find that doctors earn at least 20 percent more than people who end up in their next-best occupation. Estimated earnings profiles suggest that the life-time difference is even much larger: 21 years after the lottery the earnings difference exceeds 60 percent. Only a small fraction of this difference can be attributed to differences in working hours and human capital investments. The returns do not vary with gender or ability, but are higher for the less motivated.