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Monopsony in the Low-Wage Labor Market? Evidence from Minimum Nurse Staffing Regulations

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  • Jordan D. Matsudaira

    (Cornell University)

Abstract

This paper provides direct evidence on the extent of monopsony power in the low-wage labor market by estimating the firm-level elasticity of labor supply for nurse aides in the long-term care (nursing home) industry. Using exogenous variation in hiring induced by the passage of a state minimum nurse staffing law, I find that facilities initially out of compliance with the new law did not have to raise their wage offers relative to their competitors in order to hire more nurses. While this is consistent with perfect competition in simple monopsony models of the labor market, I discuss how the results may be more ambiguous in more complicated models. © 2014 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Jordan D. Matsudaira, 2014. "Monopsony in the Low-Wage Labor Market? Evidence from Minimum Nurse Staffing Regulations," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 92-102, March.
    • Handle: RePEc:tpr:restat:v:96:y:2014:i:1:p:92-102
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    Citations

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    Cited by:

    1. Azar, José & Vives, Xavier, 2018. "Oligopoly, Macroeconomic Performance, and Competition Policy," CEPR Discussion Papers 13000, C.E.P.R. Discussion Papers.
    2. Jahn, Elke & Hirsch, Boris, 2012. "Is there monopsonistic discrimination against immigrants? First evidence from linked employer employee data," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 65417, Verein für Socialpolitik / German Economic Association.
    3. Christina DePasquale, 2014. "Hospital Consolidation and the Nurse Labor Market," Emory Economics 1413, Department of Economics, Emory University (Atlanta).
    4. John R. Bowblis & Andrew Ghattas, 2017. "The Impact of Minimum Quality Standard Regulations on Nursing Home Staffing, Quality, and Exit Decisions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(1), pages 43-68, February.
    5. 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, April.
    6. Azar, José & Marinescu, Ioana E. & Steinbaum, Marshall & Taska, Bledi, 2018. "Concentration in US Labor Markets: Evidence from Online Vacancy Data," IZA Discussion Papers 11379, Institute for the Study of Labor (IZA).
    7. David Pence Slichter, 2015. "The Employment Effects of the Minimum Wage: A Selection Ratio Approach to Measuring Treatment Effects," 2015 Papers psl76, Job Market Papers.
    8. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, Elsevier.
    9. Kevin Rinz, 2018. "Labor Market Concentration, Earnings Inequality, and Earnings Mobility," CARRA Working Papers 2018-10, Center for Economic Studies, U.S. Census Bureau.
    10. repec:eee:exehis:v:65:y:2017:i:c:p:55-67 is not listed on IDEAS
    11. Douglas A. Webber, 2018. "Employment Adjustment Over the Business Cycle: The Impact of Competition in the Labor Market," DETU Working Papers 1806, Department of Economics, Temple University.
    12. Christina DePasquale, 2018. "Heterogeneity in Hospital Consolidation," Emory Economics 1804, Department of Economics, Emory University (Atlanta).
    13. Azar, José & Vives, Xavier, 2018. "Oligopoly, Macroeconomic Performance, and Competition Policy," CEPR Discussion Papers 13000, C.E.P.R. Discussion Papers.
    14. Sokolova, Anna & Sorensen, Todd A., 2018. "Monopsony in Labor Markets: A Meta-Analysis," IZA Discussion Papers 11966, Institute for the Study of Labor (IZA).
    15. Suresh Naidu & Yaw Nyarko & Shing-Yi Wang, 2014. "Worker Mobility in a Global Labor Market: Evidence from the United Arab Emirates," NBER Working Papers 20388, National Bureau of Economic Research, Inc.
    16. Torberg Falch, 2013. "Wages and Recruitment: Evidence from External Wage Changes," CESifo Working Paper Series 4078, CESifo Group Munich.
    17. José Azar & Ioana Marinescu & Marshall I. Steinbaum, 2017. "Labor Market Concentration," NBER Working Papers 24147, National Bureau of Economic Research, Inc.
    18. 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.
    19. Bernardo Fanfani, 2018. "Tastes for Discrimination in Monopsonistic Labour Markets," Working papers 054, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    20. Maggie R. Jones, 2016. "Measuring the Effects of the Tipped Minimum Wage Using W-2 Data," CARRA Working Papers 2016-03, Center for Economic Studies, U.S. Census Bureau.
    21. 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

    Keywords

    monopsony; labor; nursing; wages;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J0 - Labor and Demographic Economics - - General
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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