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Underpaid or Overpaid? Wage Analysis for Nurses Using Job and Worker Attributes

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  • Barry T. Hirsch

    () (Department of Economics, Andrew Young School of Policy Studies, Georgia State University, Atlanta, GA 30302-3992, USA; corresponding author)

  • Edward J. Schumacher

    () (Department of Health Care Administration and Department of Economics, Trinity University, San Antonio, TX 78212, USA)

Abstract

Nursing shortages are common despite the fact that nurses earn far higher wages than other college-educated women. Our analysis addresses the puzzle of “high” nursing wages. Employee data from the Current Population Survey are matched with detailed job descriptors from the Occupational Information Network. Nursing requires high levels of compensable skills and demanding working conditions. Standard log wage regression estimates indicate nursing wage advantages of about 40%. Accounting for job attributes reduces estimates to roughly 20%. Rather than transforming ordinary least squares log gaps to percentages, alternative methods measuring Mincerian gaps produce estimates of 15% or less. We conclude that nurses receive compensation that is much closer to opportunity costs than that seen in standard analyses, narrowing the shortage puzzle. Supply constraints in nurse licensing can produce wages above long-run opportunity costs but that are too low to clear short-run labor markets during periods of growing demand. The analysis provides broader implications for the conduct of wage analyses.

Suggested Citation

  • Barry T. Hirsch & Edward J. Schumacher, 2012. "Underpaid or Overpaid? Wage Analysis for Nurses Using Job and Worker Attributes," Southern Economic Journal, Southern Economic Association, vol. 78(4), pages 1096-1119, April.
  • Handle: RePEc:sej:ancoec:v:78:4:y:2012:p:1096-1119
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    File URL: http://dx.doi.org/10.4284/0038-4038-78.4.1096
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Hirsch, Barry & Manzella, Julia, 2014. "Who Cares – and Does It Matter? Measuring Wage Penalties for Caring Work," IZA Discussion Papers 8388, Institute for the Study of Labor (IZA).
    2. Patricia Cortés & Jessica Pan, 2012. "Relative Quality of Foreign Nurses in the United States," CReAM Discussion Paper Series 1231, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    3. repec:sae:ilrrev:v:71:y:2018:i:1:p:208-241 is not listed on IDEAS
    4. Speer, Jamin D., 2016. "How bad is occupational coding error? A task-based approach," Economics Letters, Elsevier, vol. 141(C), pages 166-168.
    5. Barry T. Hirsch & Muhammad M. Husain & John V. Winters, 2016. "Multiple job holding, local labor markets, and the business cycle," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-29, December.
    6. Michael DiNardi, 2017. "Affordable Care Act Medicaid Expansions and the Impact on Nurses," 2017 Papers pdi509, Job Market Papers.
    7. John T. Addison & Orgul D. Ozturk & Si Wang, 2018. "The Occupational Feminization of Wages," ILR Review, Cornell University, ILR School, vol. 71(1), pages 208-241, January.
    8. Cortes, Patricia & Pan, Jessica, 2014. "Foreign nurse importation to the United States and the supply of native registered nurses," Working Papers 14-7, Federal Reserve Bank of Boston.
    9. Cortés, Patricia & Pan, Jessica, 2014. "Foreign nurse importation and the supply of native nurses," Journal of Health Economics, Elsevier, vol. 37(C), pages 164-180.

    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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