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

Author

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  • Hanel, Barbara

    () (Melbourne Institute of Applied Economic and Social Research)

  • Kalb, Guyonne

    () (Melbourne Institute of Applied Economic and Social Research)

  • 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.

Suggested Citation

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

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    Cited by:

    1. 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 for the Study of Labor (IZA).
    2. repec:eee:jeborg:v:141:y:2017:i:c:p:135-150 is not listed on IDEAS
    3. Schweri, Juerg & Hartog, Joop, 2014. "Do wage expectations influence the decision to enroll in nursing college?," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100542, Verein für Socialpolitik / German Economic Association.
    4. 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.
    5. 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.

    More about this item

    Keywords

    wage elasticities; nursing; labour supply; shift work;

    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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