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Are Recessions Good for Staffing in Nursing Homes?

Author

Listed:
  • R. Tamara Konetzka

    (Department of Public Health Sciences, University of Chicago)

  • Karen B. Lasater

    (Center for Health Outcomes and Policy Research, School of Nursing, University of Pennsylvania)

  • Edward C. Norton

    (Department of Health Management and Policy and Department of Economics, University of Michigan, and NBER)

  • Rachel M. Werner

    (Division of General Internal Medicine and Leonard Davis Institute of Health Economics, University of Pennsylvania Author email: rwerner@upenn.edu)

Abstract

The quality and cost of care in nursing homes depend critically on the number and types of nurses. Recent research suggests that the nursing supply adjusts to macroeconomic conditions. However, prior work has failed to consider the effect of macroeconomic conditions on demand for nurses through the effect on revenues. We test how county-level unemployment rates affect direct-care staffing rates in nursing homes using California data. We exploit the wide variation in the unemployment rates across counties and over time in 2005–12. We also test whether there are heterogeneous effects of unemployment rates by facility size, staffing level, and profit status. We find that as unemployment rates increase, staffing by registered nurses (RNs) decreases but staffing by licensed practical nurses (LPNs) increases. The increase in LPNs is larger in large nursing homes, nursing homes with higher staffing levels, and in for-profit nursing homes. We also find that as unemployment rates increase, nursing home revenue decreases. While the effect of macroeconomic conditions on nursing supply may be important for cost and quality of care, the mechanism is not simple, direct, or homogeneous for all types of nurses and nursing homes.

Suggested Citation

  • R. Tamara Konetzka & Karen B. Lasater & Edward C. Norton & Rachel M. Werner, 2018. "Are Recessions Good for Staffing in Nursing Homes?," American Journal of Health Economics, University of Chicago Press, vol. 4(4), pages 411-432, Fall.
    • Handle: RePEc:ucp:amjhec:v:4:y:2018:i:4:p:411-432
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    Cited by:

    1. Mommaerts, Corina & Truskinovsky, Yulya, 2020. "The cyclicality of informal care," Journal of Health Economics, Elsevier, vol. 71(C).
    2. Max Warner & Ben Zaranko, 2025. "Off to the shops? Outside job opportunities and care worker labour supply," IFS Working Papers W25/61, Institute for Fiscal Studies.
    3. Erkmen G. Aslim & Shin‐Yi Chou & Kuhelika De, 2024. "Business cycles and healthcare employment," Health Economics, John Wiley & Sons, Ltd., vol. 33(9), pages 2123-2161, September.
    4. Nizalova, Olena & Norton, Edward C., 2021. "Long-term effects of job loss on male health: BMI and health behaviors," Economics & Human Biology, Elsevier, vol. 43(C).
    5. van den Berg, Gerard J. & Paul, Alexander & Reinhold, Steffen, 2020. "Economic conditions and the health of newborns: Evidence from comprehensive register data," Labour Economics, Elsevier, vol. 63(C).
    6. Geyer, Johannes & Haan, Peter & Teschner, Mia, 2025. "The impact of macroeconomic conditions on long-term care: Evidence on prices," The Journal of the Economics of Ageing, Elsevier, vol. 32(C).
    7. Danyao Li & Michael R. Richards & Coady Wing, 2019. "Economic downturns and nurse attachment to federal employment," Health Economics, John Wiley & Sons, Ltd., vol. 28(6), pages 808-814, June.
    8. Donayre, Luiggi & Loomer, Lacey, 2025. "Regime-dependent health care employment dynamics in recessions," Research in Economics, Elsevier, vol. 79(2).

    More about this item

    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services

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