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Classic Monopsony or New Monopsony? Searching for Evidence in Nursing Labor Markets

  • Hirsch, Barry

    ()

    (Georgia State University)

  • Schumacher, Edward J.

    ()

    (Trinity University)

The market for hospital registered nurses (RNs) is often offered as an example of "classic" monopsony, while a "new" monopsony literature emphasizes firm labor supply being upward-sloping for reasons other than market structure. Using data from several sources, we explore the relationship between wages and measures of classic and new monopsony. Micro wage data for 1993-2002 provide little evidence of classic monopsonistic outcomes in the long run, the relative wages of RNs in 240 U.S. labor markets being largely uncorrelated with market size or employer concentration. A short-run relationship is found, with RN wages declining in markets with increased hospital system concentration. Measures of new monopsony use data on mobility to proxy inverse supply elasticities. No relationship is found between these measure and nursing wages, but evidence supporting new monopsony is found for women elsewhere in the labor market. RNs display greater inter-employer mobility than do women (or men) in general. Two conclusions follow. First, evidence of upward sloping labor supply need not imply monopsonistic outcomes. Second, nursing should not be held up as a prototypical example of monopsony.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1154.

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Length: 39 pages
Date of creation: May 2004
Date of revision:
Publication status: published in: Journal of Health Economics, 2005, 24 (5), 969-989
Handle: RePEc:iza:izadps:dp1154
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  1. Janet Currie & Mehdi Farsi & W. Bentley MacLeod, 2003. "Cut to the Bone? Hospital Takeovers and Nurse Employment Contracts," NBER Working Papers 9428, National Bureau of Economic Research, Inc.
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