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The labor market for direct care workers

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  • Reagan Baughman
  • Kristin Smith
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    Abstract

    As the baby boom cohort nears retirement age, the question of how to provide necessary health care and personal services to a growing elderly population has become a looming policy problem. Beginning in 2020, the number of Americans over the age of 65 will surpass the number of primary providers of formal and informal long-term care (women between the ages of 20 and 44). Perceptions of shortage and very high turnover in today’s direct care labor market are compounding the potential problem. ; This paper provides an overview of the labor market for direct care workers in the United States, including comprehensive empirical analyses of wage determination and labor supply, using panel data from the 1996 and 2001 Surveys of Income and Program Participation (SIPP). The paper describes the ways in which public policy is expected to affect the direct care labor market and empirically analyzes the wages, health insurance coverage, and employment duration of direct care workers. The authors find both that wages of direct care workers are quite low, with median starting wage of $7.96, and that spells of employment with a given employer are short, averaging just under 10 months.

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    Bibliographic Info

    Paper provided by Federal Reserve Bank of Boston in its series New England Public Policy Center Working Paper with number 07-4.

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    Date of creation: 2007
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    Handle: RePEc:fip:fedbcw:07-4

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    Keywords: Medical care ; Labor market ; Baby boom generation;

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    References

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    1. William M. Boal & Michael R. Ransom, 1997. "Monopsony in the Labor Market," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 86-112, March.
    2. Anthony Heyes, 2003. "The Economics of Vocation or Why is a Badly Paid Nurse a Good Nurse?," Royal Holloway, University of London: Discussion Papers in Economics 03/4, Department of Economics, Royal Holloway University of London, revised Dec 2003.
    3. Hirsch, B.T. & Schumacher, E.J., 1993. "Monopsony Power and Relative Wages in the Labor Market for Nurses," Working Papers 1993_06_03, Department of Economics, Florida State University.
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    5. Jonah B. Gelbach & Doug Miller, 2009. "Robust Inference with Multi-way Clustering," Working Papers 99, University of California, Davis, Department of Economics.
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    7. Larry W. Hunter, 2000. "What determines job quality in nursing homes?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(3), pages 463-481, April.
    8. Douglas O. Staiger & Joanne Spetz & Ciaran S. Phibbs, 2010. "Is There Monopsony in the Labor Market? Evidence from a Natural Experiment," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 211-236, 04.
    9. Gruber, Jonathan & Poterba, James, 1994. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 701-33, August.
    10. Pepper, John V., 2002. "Robust inferences from random clustered samples: an application using data from the panel study of income dynamics," Economics Letters, Elsevier, vol. 75(3), pages 341-345, May.
    11. Jan Erik Askildsen & Badi H. Baltagi & Tor Helge Holmås, 2003. "Wage policy in the health care sector: a panel data analysis of nurses' labour supply," Health Economics, John Wiley & Sons, Ltd., vol. 12(9), pages 705-719.
    12. George J. Borjas & H. E. Frech III & Paul B. Ginsburg, 1983. "Property Rights and Wages: The Case of Nursing Homes," Journal of Human Resources, University of Wisconsin Press, vol. 18(2), pages 231-246.
    13. John P. Burkett, 2005. "The Labor Supply of Nurses and Nursing Assistants in the United States," Eastern Economic Journal, Eastern Economic Association, vol. 31(4), pages 585-599, Fall.
    14. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
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