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Nurses’ labor supply with endogenous choice of care level and shift type A nested discrete choice model with nonlinear income

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  • Sæther, Erik Magnus

    (Ragnar Frisch Centre for Economic Research)

Abstract

Shift work has a documented negative impact on workers’ health and social life, effects which are compensated for with higher wages and shorter working hours. Many countries face a ‘nursing shortage’, and increasing wages is argued to lead to an increase in the short-term labor supply in health care. Omitting shift work in the evaluation of such policies may lead to biased estimates of the wage elasticities. Focusing on registered nurses (RN) employed in the public health sector, this paper presents an econometric analysis that allows the nurses to compose their ‘job package’ in three steps by choosing: a) hospital or primary care, b) daytime or shift work and c) one of four categories of hours. The utility maximization problem is solved by discretizing the budget set and choosing the optimal job package from a finite set of alternatives. The nested structure is estimated on Norwegian micro data. There is some variation in the responsiveness to wage between shift and day workers and by care level. The job-specific elasticities are small but positive. However, the simulation of a wage increase in all job types, when conditioning the analysis to those already participating in the sector, indicates a slight reduction in hours. Thus, the income effect seems to dominate in the labor supply of nurses.

Suggested Citation

  • 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 Online Working Paper Series 2004:9, University of Oslo, Health Economics Research Programme.
  • Handle: RePEc:hhs:oslohe:2004_009
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    References listed on IDEAS

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    More about this item

    Keywords

    Registered nurses; discrete choice; labor supply; selection; nested logit; sector-specific wages;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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