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Certificate of Need and the labor market

Author

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  • Kihwan Bae
  • James Bailey

Abstract

Thirty‐five U.S. states currently have Certificate‐of‐Need (CON) laws, which require health care providers to prove their “economic necessity” to a state board before they can legally open or expand. While dozens of articles have evaluated the effect of CON on hospitals and consumers, no published article has evaluated its effect on health care workers. We argue that the sign of the effect of CON on both the wages and employment is theoretically ambiguous. We conduct an empirical analysis of CON laws using 1979–2019 data from the Current Population Survey. We find that CON does not significantly affect the employment or wages of health care workers.

Suggested Citation

  • Kihwan Bae & James Bailey, 2025. "Certificate of Need and the labor market," Southern Economic Journal, John Wiley & Sons, vol. 92(1), pages 133-151, July.
    • Handle: RePEc:wly:soecon:v:92:y:2025:i:1:p:133-151
    DOI: 10.1002/soej.12693
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    References listed on IDEAS

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    1. Daron Acemoglu & Amy Finkelstein, 2008. "Input and Technology Choices in Regulated Industries: Evidence from the Health Care Sector," Journal of Political Economy, University of Chicago Press, vol. 116(5), pages 837-880, October.
    2. 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.
    3. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    4. Andreas Olden & Jarle Møen, 2022. "The triple difference estimator [Semiparametric difference-in-differences estimators]," The Econometrics Journal, Royal Economic Society, vol. 25(3), pages 531-553.
    5. James Bailey & Tom Hamami, 2023. "Competition and health‐care spending: Theory and application to Certificate of Need laws," Contemporary Economic Policy, Western Economic Association International, vol. 41(1), pages 128-145, January.
    6. Elena Prager & Matt Schmitt, 2021. "Employer Consolidation and Wages: Evidence from Hospitals," American Economic Review, American Economic Association, vol. 111(2), pages 397-427, February.
    7. Douglas A. Webber, 2022. "Labor Market Competition and Employment Adjustment over the Business Cycle," Journal of Human Resources, University of Wisconsin Press, vol. 57(S), pages 87-110.
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