South-Western College Publishing - Economics  
For Vets, Small Animals are More Profitable Than Large Animals
Topic Labor Markets
Key Words Veterinarians, supply, demand, salary
Full Article

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Reference ID: A158887871
News Story Farmers in rural areas are beginning to see a decline in the availability of vets to help their large animals. Since 1990, the number of large animal vets has declined by about 25%, and it's because of simple economics: more money can be made with small animals than with large.

This is happening for a number of reasons. First, there are fewer people growing up on farms, and still fewer eager to go on to veterinary school to work on large animals. Second, the same procedure on a small animal is more profitable to the veterinarian than one done on a large animal. When veterinarians leave school with student loans in excess of $100,000, which can be significant.

Add on the fact that dealing with animals that can weigh in excess of 1000 pounds makes large-animal veterinary work dangerous. Typically, hedonic wage theory suggests that jobs involving higher risk should be rewarded with higher salaries. But this is not the case here.

Farmers and politicians are responding. Some farmers are being forced to shoulder the burden of simple medicine, but that raises their cost of ownership of the animals. Politicians are trying to offer incentives for veterinarians to enter underserved rural areas, but with little luck. Under some programs, student loan debt will be forgiven if doctors work in rural areas, but little financing of this program has been approved. State governments are stepping in with financial incentives as well.

Given that small-animal veterinarians earn more after graduate school than their large-animal counterparts - and this gap only increases as vets continue working - it's hard to justify more dangerous working conditions for less pay. If only the vets could be guaranteed that the cows wouldn't attack.

Questions
Discussion Questions:
1. What are Congress and the state legislators trying to do with their proposals?
2. Hedonic wage theory suggests that the shortage could be addressed by doing what?
3. Why would a procedure performed on a small dog be more expensive than the same one performed on a large animal? Does it have anything to do with the relative value of the dog to its owner, and the cow to the farmer?
Multiple Choice/True False Questions:
1. According to the article, what is happening in the market for large-animal veterinarians?
  1. Supply is rising.
  2. Supply is falling.
  3. Demand is rising.
  4. Demand is falling.
2. According to the theory of hedonic wages, workers taking on jobs involving higher risk should receive -------- wages than workers without that risk

  1. Higher
  2. Lower
  3. The same
  4. More elastic
3. Given the shortage, what should be happening to the wages of large-animal doctors?

  1. They should be falling.
  2. They should be rising.
  3. They should be remaining the same.
  4. They should be more elastic.
Source Belluck, Pam. "A New Problem for Farmers: Few Veterinarians." The New York Times, February 6, 2007.
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