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Compensating differentials for nurses

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  • Sæther, Erik Magnus

    () (Ragnar Frisch Centre for Economic Research)

Abstract

When entering the job market registered nurses (RNs) face job alternatives with differences in wages and other job attributes. Previous studies of the nursing labor market have shown large earnings differences between similar hospital and non-hospital RNs. Corresponding differences are found in some of the analyses of shift and regular daytime workers. In the first part of this paper I analyze the wage differentials in the Norwegian public health sector, applying a switching regression model. I find no hospital premium for the shift RNs and a slightly negative hospital premium for the daytime RNs, but it is not significant for the hospital job choice. I find a positive shift premium. The wage rate is 19% higher for the shift working hospital RNs and 18% for the sample of primary care workers. The shift premium is only weakly significant for the shift work choice for the sample of hospital RNs, and not for the primary care RNs. I identify some selection effects. In the second part of the paper I focus on the shift compensation only, and present a structural labor supply model with a random utility function. This is done to identify the expected compensating variation necessary for the nurses to remain on the same utility level when they are “forced” from a day job to a shift job. The expected compensating variations are derived by Monte Carlo simulations and presented for different categories of hours. I find that on average the offered combination of higher wages, shorter working hours and increased flexibility overcompensates for the health and social strains related to shift work.

Suggested Citation

  • Sæther, Erik Magnus, 2009. "Compensating differentials for nurses," HERO On line Working Paper Series 2004:10, Oslo University, Health Economics Research Programme.
  • Handle: RePEc:hhs:oslohe:2004_010
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    File URL: http://www.hero.uio.no/publicat/2004/HERO2004_10.pdf
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    References listed on IDEAS

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    1. Charles R. Link, 1988. "Returns to Nursing Education: 1970-84," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 372-387.
    2. Hamermesh, Daniel S, 1999. "The Timing of Work over Time," Economic Journal, Royal Economic Society, vol. 109(452), pages 37-66, January.
    3. Paul van den Noord & Terje Hagen & Tor Iversen, 1998. "The Norwegian Health Care System," OECD Economics Department Working Papers 198, OECD Publishing.
    4. Kostiuk, Peter F, 1990. "Compensating Differentials for Shift Work," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1054-1075, October.
    5. Edward J. Schumacher & Barry T. Hirsch, 1997. "Compensating Differentials and Unmeasured Ability in the Labor Market for Nurses: Why Do Hospitals Pay More?," ILR Review, Cornell University, ILR School, vol. 50(4), pages 557-579, July.
    6. Lanfranchi, Joseph & Ohlsson, Henry & Skalli, Ali, 2002. "Compensating wage differentials and shift work preferences," Economics Letters, Elsevier, vol. 74(3), pages 393-398, February.
    7. Aaberge, Rolf & Dagsvik, John K & Strom, Steinar, 1995. " Labor Supply Responses and Welfare Effects of Tax Reforms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 635-659, December.
    8. Aaberge, Rolf & Colombino, Ugo & Strom, Steinar, 1999. "Labour Supply in Italy: An Empirical Analysis of Joint Household Decisions, with Taxes and Quantity Constraints," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(4), pages 403-422, July-Aug..
    9. Hwang, Hae-shin & Reed, W Robert & Hubbard, Carlton, 1992. "Compensating Wage Differentials and Unobserved Productivity," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 835-858, August.
    10. LaVonne A. Booton & Julia I. Lane, 1985. "Hospital Market Structure and the Return to Nursing Education," Journal of Human Resources, University of Wisconsin Press, vol. 20(2), pages 184-196.
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    More about this item

    Keywords

    Registered nurses; compensating variations; switching regression; random utility models; discrete choice; shift work; labor supply;

    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
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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