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Can Pay Regulation Kill? Panel Data Evidence on the Effect of Labor Markets on Hospital Performance

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  • Carol Propper
  • John Van Reenen

Abstract

In many sectors, pay is regulated to be equal across heterogeneous geographical labor markets. When the competitive outside wage is higher than the regulated wage, there are likely to be falls in quality. We exploit panel data from the population of English hospitals in which regulated pay for nurses is essentially flat across the country. Higher outside wages significantly worsen hospital quality as measured by hospital deaths for emergency heart attacks. A 10 percent increase in the outside wage is associated with a 7 percent increase in death rates. Furthermore, the regulation increases aggregate death rates in the public health care system. (c) 2010 by The University of Chicago. All rights reserved..

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 118 (2010)
Issue (Month): 2 (04)
Pages: 222-273

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Handle: RePEc:ucp:jpolec:v:118:y:2010:i:2:p:222-273

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  1. A Bad Bargain by Mark Harrison
    by Mark Harrison in Mark Harrison's blog on 2012-09-19 07:40:08
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Cited by:
  1. Nicola Lacetera & Mario Macis & Robert Slonim, 2011. "Rewarding Altruism? A Natural Field Experiment," NBER Working Papers 17636, National Bureau of Economic Research, Inc.
  2. Simon Burgess & Carol Propper & Marisa Ratto & Emma Tominey, 2011. "Incentives in the Public Sector: Evidence from a Government Agency," The Centre for Market and Public Organisation 11/265, Department of Economics, University of Bristol, UK.
  3. Propper, C & Bloom, N & Seiler, S & Van Reenen, J, . "The impact of competition on management quality: evidence from public hospitals," Working Papers 5915, Imperial College, London, Imperial College Business School.
  4. Falch, Torberg & Johansen, Kåre & Strøm, Bjarne, 2009. "Teacher shortages and the business cycle," Labour Economics, Elsevier, vol. 16(6), pages 648-658, December.
  5. Martin Gaynor & Rodrigo Moreno-Serra & Carol Propper, 2010. "Death by Market Power. Reform, Competition and Patient Outcomes in the National Health Service," The Centre for Market and Public Organisation 10/242, Department of Economics, University of Bristol, UK.
  6. Stratford Douglas & Thomas A. Garrett & Russell M. Rhine, 2009. "Disallowances and overcapitalization in the U.S. electric utility industry," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 23-32.
  7. Daniele Nosenzo, 2012. "Pay Secrecy and effort provision," Discussion Papers 2012-13, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  8. MORIKAWA Masayuki, 2010. "Economies of Scale and Hospital Productivity: An empirical analysis of medical area level panel data," Discussion papers 10050, Research Institute of Economy, Trade and Industry (RIETI).
  9. Giulia Faggio & Henry G. Overman, 2012. "The Effect of Public Sector Employment on Local Labour Markets," SERC Discussion Papers 0111, Spatial Economics Research Centre, LSE.
  10. Eric Delattre & Jean-Baptiste Combès & Bob Elliott & Diane Skatun, 2012. "Hospital Staffing and Local Pay: an Investigation into the Impact of Local variations in the Competitiveness of Nurses Pay on the Staffing of Hospitals in France," THEMA Working Papers 2012-35, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  11. Ann P. Bartel & Ciaran S. Phibbs & Nancy Beaulieu & Patricia Stone, 2011. "Human Capital and Organizational Performance: Evidence from the Healthcare Sector," NBER Working Papers 17474, National Bureau of Economic Research, Inc.
  12. Corry, Dan & Valero, Anna & Van Reenen, John, 2011. "UK economic performance since 1997: growth, productivity and jobs ," Open Access publications from London School of Economics and Political Science CEPSP24, London School of Economics and Political Science.
  13. Eich, Frank, 2009. "Evaluating public and private sector pensions: The importance of sectoral pay differentials," EconStor Preprints 54561, ZBW - German National Library of Economics.
  14. repec:cep:cepsps:24 is not listed on IDEAS

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