Designing incentives for rural health care providers in developing countries

In many developing country settings, and particularly in rural areas, the implementation of anything more than very rudimentary contracts for medical care providers, including public employees, is virtually impossible. In this paper, we examine the kinds of policy levers that governments might conceivably have available to induce physicians to serve in rural areas. Using simple models of screening and spatial competition, we investigate how the government can sort between physicians with low and high opportunity costs of relocation, and how the quality of existing providers (e.g., traditional healers) might affect the government’s training policies. D 2002 Elsevier Science B.V. All rights reserved. JEL classification: H42; I11; O18