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Cut to the Bone Hospital Takeovers and Nurse Employment Contracts

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Author Info
Janet Currie (University of California Los Angeles and NBER)
Mehdi Farsi (University of Lugano Center for Energy Policy and Economics Federal Institute of Technology, Switzerland)
Bentley W. MacLeod (University of Southern California and IZA, Bonn)

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Abstract

This paper uses data from the 1990s to examine changes in the wages, employment, and e¡èort of nurses in California hospitals following takeovers by large chains. The market for nurses has been described as a classic monopsony, so that one might expect increases in ?rm market power to be associated with declines in wages. However, a basic contracting model predicts e¡èects on e¡èort rather than on wages, which is what we see in the data ?nurses see few declines in wages following takeovers, but see increases in the number of patients per nurse, our measure of e¡èort. We show that our results are also consistent with an extended version of the monopsony model that considers e¡èort, and allows for revenue shifts following a takeover. Finally, we ?nd that these changes are similar in the largest for-profit and non-profit chains, suggesting that market forces are more important than institutional form.

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Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 8.

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Date of creation: Mar 2004
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Handle: RePEc:pri:indrel:8

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  4. Janet Currie & John Fahr, 2002. "Medicaid Managed Care: Effects on Children's Medicaid Coverage and Utilization," NBER Working Papers 8812, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hirsch, Barry T. & Schumacher, Edward J., 2004. "Classic Monopsony or New Monopsony? Searching for Evidence in Nursing Labor Markets," IZA Discussion Papers 1154, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Mehdi Farsi & Geert Ridder, 2006. "Estimating the out-of-hospital mortality rate using patient discharge data," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 983-995. [Downloadable!]
  3. J.M. Etienne & A. Skalli, 2003. "Health Status and Socio-Economic Inequalities : A Review of the French Litterature," Working Papers ERMES 0317, ERMES, University Paris 2. [Downloadable!]
  4. Mehdi Farsi & Geert Ridder, 2006. "Estimating the Out-of-Hospital Mortality Rate Using Patient Discharge Data," IEPR Working Papers 06.45, Institute of Economic Policy Research (IEPR). [Downloadable!]
  5. 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. [Downloadable!]
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