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The Earnings and Employment of Nurses in an Era of Cost Containment

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  • Edward J. Schumacher

Abstract

Previous research has shown that from the 1980s through the early 1990s, nurses enjoyed substantial wage and employment gains that stemmed, to some extent, from increased labor demand. Using individual data for 1988–98 to compare nurses' fortunes with those of college-educated women and other workers in the health care industry, the author documents that nurses experienced a decline in real wages beginning in the early 1990s, at the same time that the skill premium for RNs, as reflected by the return to education and experience, was increasing. Changes in measured characteristics and their returns explain very little of the decline, consistent with the theory that the relative wage decrease was driven by a decline in the demand for RNs and increased cost constraints. The effects of HMO penetration are found to explain only a small part of the variation in wages across metropolitan statistical areas and across time.

Suggested Citation

  • Edward J. Schumacher, 2001. "The Earnings and Employment of Nurses in an Era of Cost Containment," ILR Review, Cornell University, ILR School, vol. 55(1), pages 116-132, October.
    • Handle: RePEc:sae:ilrrev:v:55:y:2001:i:1:p:116-132
    DOI: 10.1177/001979390105500107
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    References listed on IDEAS

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    1. 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.
    2. repec:eee:labchp:v:1:y:1986:i:c:p:525-602 is not listed on IDEAS
    3. Edward J. Schumacher, "undated". "Relative Wages and the Returns to Education in the Labor Market for Registered Nurses," Working Papers 9720, East Carolina University, Department of Economics.
    4. Hirsch, Barry T. & Schumacher, Edward J., 1995. "Monopsony power and relative wages in the labor market for nurses," Journal of Health Economics, Elsevier, vol. 14(4), pages 443-476, October.
    5. Krall, Lisa, 1995. "The Rise and Fall of Customary Wage Differentials among Nursing Personnel in US Hospitals: 1956-1985," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(3), pages 405-419, June.
    6. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-338, May.
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    Cited by:

    1. Susan N. Houseman & Arne L. Kalleberg & George A. Erickcek, 2003. "The Role of Temporary Agency Employment in Tight Labor Markets," ILR Review, Cornell University, ILR School, vol. 57(1), pages 105-127, October.

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