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Wage policy in the health care sector: a panel data analysis of nurses' labour supply

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  • Jan Erik Askildsen

    (Programme for Health Economics in Bergen, Department of Economics, University of Bergen, Norway)

  • Badi H. Baltagi

    (Department of Economics, Texas A&M University, USA)

  • Tor Helge Holmås

    (Programme for Health Economics in Bergen, Department of Economics, University of Bergen, Norway)

Abstract

Shortage of nurses is a problem in several countries. It is an unsettled question whether increasing wages constitute a viable policy for extracting more labour supply from nurses. In this paper we use a unique matched panel data set of Norwegian nurses covering the period 1993-1998 to estimate wage elasticities. The data set includes detailed information on 19 638 individuals over 6 years totalling 69 122 observations. The estimated wage elasticity after controlling for individual heterogeneity, sample selection and instrumenting for possible endogeneity is 0.21. Individual and institutional features are statistically significant and important for working hours. Contractual arrangements as represented by shift work are also important for hours of work, and omitting information about this common phenomenon will underestimate the wage effect. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • Jan Erik Askildsen & Badi H. Baltagi & Tor Helge Holmås, 2003. "Wage policy in the health care sector: a panel data analysis of nurses' labour supply," Health Economics, John Wiley & Sons, Ltd., vol. 12(9), pages 705-719.
  • Handle: RePEc:wly:hlthec:v:12:y:2003:i:9:p:705-719
    DOI: 10.1002/hec.836
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    File URL: http://hdl.handle.net/10.1002/hec.836
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    Cited by:

    1. Catia Nicodemo, 2009. "Selection Bias and Unobservable Heterogeneity applied at the Wage Equation of European Married Women," Working Papers wpdea0906, Department of Applied Economics at Universitat Autonoma of Barcelona.
    2. Semykina, Anastasia & Wooldridge, Jeffrey M., 2010. "Estimating panel data models in the presence of endogeneity and selection," Journal of Econometrics, Elsevier, vol. 157(2), pages 375-380, August.
    3. Wladimir Raymond & Pierre Mohnen & Franz Palm & Sybrand Schim van der Loeff, 2007. "The Behavior of the Maximum Likelihood Estimator of Dynamic Panel Data Sample Selection Models," CIRANO Working Papers 2007s-06, CIRANO.
    4. Paul Frijters & Michael A. Shields & Stephen Wheatley Price, 2007. "Investigating the quitting decision of nurses: panel data evidence from the british national health service," Health Economics, John Wiley & Sons, Ltd., vol. 16(1), pages 57-73.
    5. Hanel, Barbara & Kalb, Guyonne & Scott, Anthony, 2014. "Nurses’ labour supply elasticities: The importance of accounting for extensive margins," Journal of Health Economics, Elsevier, vol. 33(C), pages 94-112.
    6. Sæther, Erik Magnus, 2009. "Will increased wages increase nurses' working hours in the health care sector?," HERO On line Working Paper Series 2004:7, Oslo University, Health Economics Research Programme.
    7. William Nilsson, 2008. "Unemployment, Splitting up, and Spousal Income Replacement," LABOUR, CEIS, vol. 22(1), pages 73-106, March.
    8. T. Kankaanranta & P. Rissanen, 2009. "The labor supply of registered nurses in Finland: the effect of wages and working conditions," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 10(2), pages 167-178, May.
    9. Schweri, Juerg & Hartog, Joop, 2014. "Do wage expectations influence the decision to enroll in nursing college?," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100542, Verein für Socialpolitik / German Economic Association.
    10. Alex Almeida & Boris Bravo-Ureta, 2011. "Agricultural Productivity And Off-Farm Labor Decisions By Heads And Spouses In Nicaragua: A Semiparametric Analysis Using Panel Data," ERSA conference papers ersa11p508, European Regional Science Association.
    11. T. Kankaanranta & P. Rissanen, 2008. "Nurses’ intentions to leave nursing in Finland," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 9(4), pages 333-342, November.
    12. Sæther, Erik Magnus, 2009. "Nurses’ labor supply with endogenous choice of care level and shift type A nested discrete choice model with nonlinear income," HERO On line Working Paper Series 2004:9, Oslo University, Health Economics Research Programme.
    13. Denise Doiron & Glenn Jones, 2004. "Nurses' retention and hospital characteristics in New South Wales, CHERE Discussion Paper No 52," Discussion Papers 52, CHERE, University of Technology, Sydney.
    14. Claude Montmarquette & Laure Thomas, 2005. "La pénurie de travailleurs qualifiés," CIRANO Project Reports 2005rp-03, CIRANO.
    15. Rodrigo A. Cerda & Diego Saravia, 2009. "Corporate Tax, Firm Destruction and Capital Stock Accumulation: Evidence From Chilean Plants, 1979-2004," Working Papers Central Bank of Chile 521, Central Bank of Chile.
    16. Reagan Baughman & Kristin Smith, 2007. "The labor market for direct care workers," New England Public Policy Center Working Paper 07-4, Federal Reserve Bank of Boston.
    17. Barbara Eberth & Robert F. Elliott & Diane Skåtun, 2016. "Pay or conditions? The role of workplace characteristics in nurses’ labor supply," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(6), pages 771-785, July.
    18. Qin, Xuezheng & Li, Lixing & Hsieh, Chee-Ruey, 2013. "Too few doctors or too low wages? Labor supply of health care professionals in China," China Economic Review, Elsevier, vol. 24(C), pages 150-164.
    19. Elliott, Robert F. & Ma, Ada H.Y. & Scott, Anthony & Bell, David & Roberts, Elizabeth, 2007. "Geographically differentiated pay in the labour market for nurses," Journal of Health Economics, Elsevier, vol. 26(1), pages 190-212, January.
    20. Divine Ikenwilo & Anthony Scott, 2007. "The effects of pay and job satisfaction on the labour supply of hospital consultants," Health Economics, John Wiley & Sons, Ltd., vol. 16(12), pages 1303-1318.

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