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

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Listed author(s):
  • 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.

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File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00361
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Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 96 (2014)
Issue (Month): 1 (March)
Pages: 92-102

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Handle: RePEc:tpr:restat:v:96:y:2014:i:1:p:92-102
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Keywords: monopsony; labor; nursing; wages;

Find related papers by 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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Cited by:

  1. Christina DePasquale, 2014. "Hospital Consolidation and the Nurse Labor Market," Emory Economics 1413, Department of Economics, Emory University (Atlanta).
  2. 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.
  3. 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.
  4. 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.
  5. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, Elsevier.
  6. 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.
  7. Torberg Falch, 2013. "Wages and Recruitment: Evidence from External Wage Changes," CESifo Working Paper Series 4078, CESifo Group Munich.
  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.

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