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Wage Determination of Registered Nurses in Proprietary and Nonprofit Nursing Homes

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  • A. G. Holtmann
  • Todd L. Idson
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    Abstract

    This study explores why registered nurses employed in nonprofit nursing homes earn higher wages than those employed in proprietary facilities. Previous studies have explained this finding in a property rights context, where higher wages were posited to result from the weaker incentives for cost minimization accompanying nonprofit status. This paper tests an alternative explanation of sectoral wage differences which is predicated on the reason for the coexistence of for-profit and nonprofit firms in a given industry. Informational constraints concerning the quality of care are posited to cause the long-term health care market to fail to provide care at the upper levels of a quality of care continuum. Nonprofits are viewed as a response to this form of market failure, acting to fulfill customers demand for higher quality (and higher cost) long-term care, with attendant demand for higher quality nurses than in for-profit homes. Both the observed sectoral pattern in selectivity, and wage decompositions based on selectivity corrected wage regressions, call into question the property right explanation yet are consistent with an asymmetric information explanation.

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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 28 (1993)
    Issue (Month): 1 ()
    Pages: 55-79

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    Handle: RePEc:uwp:jhriss:v:28:y:1993:i:1:p:55-79

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    Web page: http://jhr.uwpress.org/

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    Cited by:
    1. Pudney, Stephen & Shields, Michael A., 1999. "Gender and Racial Discrimination in Pay and Promotion for NHS Nurses," IZA Discussion Papers 85, Institute for the Study of Labor (IZA).
    2. Patrick Francois, 2007. "Making a difference," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 714-732, 09.
    3. Edward Schumacher, 2009. "Does Public or Not-for-Profit Status Affect the Earnings of Hospital Workers?," Journal of Labor Research, Springer, vol. 30(1), pages 9-34, March.
    4. Robert Drago, 1994. "The Effects of Job and Housing Location on Race/Gender Wage Differentials in Milwaukee: Testing the `Network Hypothesis'," Labor and Demography 9404001, EconWPA.
    5. Noguchi, Haruko & Shimizutani, Satoshi, 2007. "Nonprofit/for-profit status and earning differentials in the Japanese at-home elderly care industry: Evidence from micro-level data on home helpers and staff nurses," Journal of the Japanese and International Economies, Elsevier, vol. 21(1), pages 106-120, March.
    6. Shimizutani, Satoshi & Suzuki, Wataru, 2007. "Quality and efficiency of home help elderly care in Japan: Evidence from micro-level data," Journal of the Japanese and International Economies, Elsevier, vol. 21(2), pages 287-301, June.
    7. Katsuyoshi Nakazawa, 2013. "Differential market entry determinants for for-profit and nonprofit long-term care providers," MAGKS Papers on Economics 201313, Philipps-Universit├Ąt Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    8. Astrid Haider & Ulrike Schneider, 2010. "The Influence Of Volunteers, Donations And Public Subsidies On The Wage Level Of Nonprofit Workers: Evidence From Austrian Matched Data," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 81(1), pages 1-20, 03.
    9. Hirth, Richard A., 1999. "Consumer information and competition between nonprofit and for-profit nursing homes," Journal of Health Economics, Elsevier, vol. 18(2), pages 219-240, April.
    10. Markus Kitzmueller & Jay Shimshack, 2012. "Economic Perspectives on Corporate Social Responsibility," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 51-84, March.
    11. Jones, Cheryl Bland & Gates, Michael, 2004. "Gender-based wage differentials in a predominantly female profession: observations from nursing," Economics of Education Review, Elsevier, vol. 23(6), pages 615-631, December.
    12. Patrick Francois, 2004. "'Making a Difference': Labor Donations in the Production of Public Goods," The Centre for Market and Public Organisation 04/093, Department of Economics, University of Bristol, UK.

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