Working Paper: NBER ID: w9428
Authors: Janet Currie; Mehdi Farsi; W. Bentley Macleod
Abstract: This paper uses data from the 1990s to examine changes in the wages, employment, and effort of nurses in California hospitals following takeovers by large chains. The market for nurses has been described as a classic monopsony, so that one might expect increases in firm market power to be associated with declines in wages. However, we show that if one extends the monopsony model to consider effort, or if we apply a basic contracting model to the data, then we would expect to see effects on effort rather than on wages. This prediction is bourne out by the data nurses see few declines in wages following takeovers, but see increases in the number of patients per nurse, our measure of effort. We also find that these changes are similar in the largest for-profit and non-profit chains, suggesting that market forces are more more important than institutional form.
Keywords: No keywords provided
JEL Codes: I11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Hospital takeovers by large chains (I11) | Nurse employment contracts (J41) |
| Increases in market power among hospital chains (D49) | Increases in effort of nurses (I11) |
| Hospital takeovers (I19) | Increased patient loads per nurse (I11) |
| Hospital takeovers (I19) | Minimal wage declines (J38) |
| Wages are contractible while effort is not (J41) | Observed increases in effort without corresponding wage declines (J39) |
| Market forces (P42) | Relationship holds across for-profit and non-profit chains (L39) |