Working Paper: NBER ID: w29110
Authors: Diane E. Alexander; Michael R. Richards
Abstract: Hospitals anchor much of US health care and receive a third of all medical spending, including various subsidies. Nevertheless, some become insolvent and exit the market. Research has documented subsequent access problems; however, less is understood about broader implications. We examine over 100 rural hospital closures spanning 2005-2017 to quantify the effects on the local economy. We find sharp and persistent reductions in employment, but these localize to health care occupations and are more impactful in areas experiencing complete closures. Aggregate consumer financial health and housing markets appear unaffected by the shuttering of a rural hospital.
Keywords: hospital closures; local economy; employment; rural health care
JEL Codes: H51; I11; I18; J21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rural hospital closures (R19) | reductions in employment (J63) |
| rural hospital closures (R19) | reductions in health care jobs (I11) |
| rural hospital closures (R19) | spillover effects on adjacent counties (R11) |
| rural hospital closures (R19) | agglomeration effects (R11) |
| hospital closures (I11) | economic ramifications confined to health care employment (I11) |
| full closures (J65) | stronger economic effects (F69) |
| critical access hospitals (I11) | differences in labor market effects (J29) |