Registered nurses: the impact of wages on labour force participation and hours worked – are wages an effective mechanism for addressing RN shortages with evidence from 1960 to 2008?

ABSTRACT

Registered nurses (RNs) are critical producers and coordinators of patient care in acute and non-acute settings (Needleman et al. 2011). The Affordable Care Act coupled with an ageing population, are increasing demand for health care and, in turn, RNs. Numbering 3 million, RNs comprise the largest professional occupation in health care. Therefore, the labour force participation and hours worked are of keen interest to stakeholders and policymakers. Rising demand may exacerbate nursing shortages and have important effects on costs. We estimate the impact of wages on participation and hours worked as a possible policy tool to increase nursing supply. In 2008, the RN wage had a positive and significant effect on participation and a small positive but only marginally significant effect on hours worked given participation. The latter elasticity for married females (single females) was 0.11 (0.33). Therefore, the elasticity of hours worked with respect to the nurse wage is and unlikely to have an important effect on the participation rates or hours worked of currently trained female RNs. Consequently, wage increases are unlikely to be an effective policy to increase the labour supply among the currently licensed RNs and will not relieve any short-term nursing shortage.

KEYWORDS:

• Registered nurses
• labour supply
• wage elasticity
• health care
• labour force participation

JEL CLASSIFICATION:

• I00
• J00
• J20
• J30

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ See Chiha-Link (2003) for a more detailed survey.

² Annual hours are computed by multiplying the normal hours worked per week and the weeks worked per year.

³ The wage equations are available on request.

⁴ Family composition variables and other family income are included in the participation but not in the wage equation for the purpose of identifying the wage equation. In the labour supply estimations, it was necessary to rely on the nonlinearity of the estimation procedure for identification.

⁵ See Link (1992), Chiha and Link (2003), BLS.gov and 2008 NSSRN.