Compensating Differentials and Unmeasured Ability in the Labor Market for Nurses: Why Do Hospitals Pay More?

INDUSTRIAL AND LABOR RELATIONS REVIEW, Vol. 50, No. 4 (July 1997)

Posted: 18 Apr 1998

See all articles by Edward J. Schumacher

Edward J. Schumacher

Trinity University - Department of Health Care Administration

Barry T. Hirsch

IZA Institute of Labor Economics; Georgia State University

Abstract

Registered nurses (RNs) employed in hospitals realize a large wage advantage relative to RNs employed elsewhere. Cross-sectional estimates indicate a hospital RN wage advantage of roughly 20%. This paper examines possible sources of the hospital premium, a topic of some interest given the current shifting of medical care out of hospitals. Longitudinal analysis of Current Population Survey data for 1979-94 suggests that a third to a half of the advantage is due to unmeasured worker ability, and the authors conclude that the remainder of the advantage probably reflects compensating differentials for hospital disamenities. Supporting these conclusions is evidence that hospital RNs have higher cognitive ability and higher-quality job experience than non-hospital RNs, and indications that shift work accounts for roughly 10% of the hospital premium.

JEL Classification: J44, J31, I19

Suggested Citation

Schumacher, Edward J. and Hirsch, Barry T. and Hirsch, Barry T., Compensating Differentials and Unmeasured Ability in the Labor Market for Nurses: Why Do Hospitals Pay More?. INDUSTRIAL AND LABOR RELATIONS REVIEW, Vol. 50, No. 4 (July 1997), Available at SSRN: https://ssrn.com/abstract=5188

Edward J. Schumacher

Trinity University - Department of Health Care Administration ( email )

715 Stadium Drive
San Antonio, TX 78212-7200
United States
210-999-8137 (Phone)
210-999-8108 (Fax)

Barry T. Hirsch (Contact Author)

Georgia State University ( email )

Department of Economics
Andrew Young School of Policy Studies
Atlanta, GA 30302-3992
United States
404-413-0880 (Phone)
404-413-0145 (Fax)

HOME PAGE: http://unionstats.gsu.edu/bhirsch

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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