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Nurses' Labour Supply Elasticities: The Importance of Accounting for Extensive Margins

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  • Hanel, Barbara

    (Melbourne Institute of Applied Economic and Social Research)

  • Kalb, Guyonne

    (University of Melbourne)

  • Scott, Anthony

    (Melbourne Institute of Applied Economic and Social Research)

Abstract

Many countries face a continuing shortage in nurses' labour supply. Previous research suggests that nurses respond only weakly to changes in wages. We estimate a multi-sector model of nursing qualification holders' labour supply in different occupations. A structural approach allows us to model the labour force participation decision, the occupational and shift-type choice, and the decision about hours worked as a joint outcome following from maximizing a utility function. Disutility from work is allowed to vary by occupation and also by shift type in the utility function. Furthermore, we allow the preference parameters in the utility function to vary by certain family characteristics and personality. Our results suggest that average wage elasticities might be higher than previous research has found. This is mainly due to the effect of wages on the decision to enter or exit the profession, which was not included in the previous literature, rather than from its effect on increased working hours for those who already work in the profession. We find that the negative labour supply elasticities with respect to income are higher for nurses with children, while the positive elasticities with respect to wages are higher for low-qualified, older and childless nurses. Elasticities do not appear to vary by personality trait.

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  • Hanel, Barbara & Kalb, Guyonne & Scott, Anthony, 2012. "Nurses' Labour Supply Elasticities: The Importance of Accounting for Extensive Margins," IZA Discussion Papers 6573, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6573
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    Cited by:

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    2. Martin Kroczek, 2021. "Analyzing Nurses‘ Decisions to Leave Their Profession – a Duration Analysis," IAW Discussion Papers 136, Institut für Angewandte Wirtschaftsforschung (IAW).
    3. Kalb, Guyonne & Kühnle, Daniel & Scott, Anthony & Cheng, Terence Chai & Jeon, Sung-Hee, 2015. "What Factors Affect Doctors' Hours Decisions: Comparing Structural Discrete Choice and Reduced-Form Approaches," IZA Discussion Papers 9054, Institute of Labor Economics (IZA).
    4. Schweri, Juerg & Hartog, Joop, 2017. "Do wage expectations predict college enrollment? Evidence from healthcare," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 135-150.
    5. Schweri, Juerg & Hartog, Joop, 2014. "Do wage expectations influence the decision to enroll in nursing college?," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100542, Verein für Socialpolitik / German Economic Association.
    6. Juerg Schweri, 2021. "Predicting polytomous career choices in healthcare using probabilistic expectations data," Health Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 544-563, March.
    7. Philipp Kugler, 2022. "The role of wage beliefs in the decision to become a nurse," Health Economics, John Wiley & Sons, Ltd., vol. 31(1), pages 94-111, January.
    8. Martin Kroczek & Jochen Späth, 2022. "The attractiveness of jobs in the German care sector: results of a factorial survey," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(9), pages 1547-1562, December.
    9. 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.
    10. David Ulph, 2020. "The Drivers of the Nursing Workforce Gap: a Theoretical Framework," Discussion Paper Series, School of Economics and Finance 202005, School of Economics and Finance, University of St Andrews, revised 11 Sep 2020.
    11. Rowena Crawford & Richard Disney & Carl Emmerson, 2015. "The short run elasticity of National Health Service nurses’ labour supply in Great Britain," IFS Working Papers W15/04, Institute for Fiscal Studies.
    12. Martin Kroczek & Philipp Kugler & Anne Zühlke, 2022. "Erwerbsverläufe und Einkommensentwicklung in der Pflege," IAW Discussion Papers 137, Institut für Angewandte Wirtschaftsforschung (IAW).
    13. Katharina Saunders & Christian Hagist & Alistair McGuire & Christian Schlereth, 2020. "Preferences of a new health care profession. A pilot study with anaesthesia technologist trainees in Germany," WHU Working Paper Series - Economics Group 20-01, WHU - Otto Beisheim School of Management.
    14. Christine Dauth & Julia Lang, 2019. "Can the unemployed be trained to care for the elderly? The effects of subsidized training in elderly care," Health Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 543-555, April.
    15. Guyonne Kalb & Daniel Kuehnle & Anthony Scott & Terence Chai Cheng & Sung‐Hee Jeon, 2018. "What factors affect physicians' labour supply: Comparing structural discrete choice and reduced‐form approaches," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 101-119, February.
    16. Michael DiNardi, 2021. "Affordable Care Act Medicaid expansions and the nurse labor market," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 367-398, July.

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    More about this item

    Keywords

    wage elasticities; nursing; labour supply; shift work;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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