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Labor Prices and the Treatment of Nursing Home Residents with Dementia


  • David Grabowski
  • John Bowblis
  • Judith Lucas
  • Stephen Crystal


An important aspect of dementia care for nursing home residents is the management of symptoms such as behavioral problems and wandering. Nursing homes can manage these symptoms using a mix of labor, medications and physical restraints. Medications such as antipsychotics are hypothesized to be a substitute for direct care staff, while physical restraints are considered to be a complement to staff time. Using an instrumental variables approach, we investigate whether an increase in nursing home wages leads to greater substitution towards antipsychotic medications and away from the use of physical restraints. Our results suggest a 10% increase in weekly nursing home wages increases the inappropriate use of antipsychotics among dementia patients by 1.1% to 3.5%, while it decreases the use of physical restraints by roughly 26% to 28%. These findings suggest policymakers should consider nursing home market factors when overseeing and regulating issues of nursing home quality.

Suggested Citation

  • David Grabowski & John Bowblis & Judith Lucas & Stephen Crystal, 2011. "Labor Prices and the Treatment of Nursing Home Residents with Dementia," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(2), pages 273-292.
  • Handle: RePEc:taf:ijecbs:v:18:y:2011:i:2:p:273-292
    DOI: 10.1080/13571516.2011.584431

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    References listed on IDEAS

    1. Machin, Stephen & Manning, Alan & Rahman, Lupin, 2002. "Where the minimum wage bites hard: the introduction of the UK national minimum wage to a low wage sector," LSE Research Online Documents on Economics 20070, London School of Economics and Political Science, LSE Library.
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    Cited by:

    1. John Bowblis & Judith Lucas, 2012. "The impact of state regulations on nursing home care practices," Journal of Regulatory Economics, Springer, vol. 42(1), pages 52-72, August.
    2. Yaa Akosa Antwi & John R. Bowblis, 2016. "The Impact of Nurse Turnover on Quality of Care and Mortality in Nursing Homes: Evidence from the Great Recession," Upjohn Working Papers and Journal Articles 16-249, W.E. Upjohn Institute for Employment Research.
    3. John Bowblis, 2015. "The cost of regulation: More stringent staff regulations and nursing home financial performance," Journal of Regulatory Economics, Springer, vol. 47(3), pages 325-338, June.


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