Cut to the Bone? Hospital Takeovers and Nurse Employment Contracts

Posted: 6 May 2005

See all articles by Janet Currie

Janet Currie

Princeton University; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Mehdi Farsi

University of Neuchatel - Institute for Research in Economics (IRENE)

W. Bentley MacLeod

Columbia University - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Multiple version iconThere are 3 versions of this paper

Abstract

The authors examine changes in the wages, employment, and effort of nurses in California hospitals following takeovers by large chains using 1990s data. 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, a basic contracting model predicts effects on effort rather than on wages, which is what this analysis finds: nurses experienced few declines in wages following takeovers, but did see increases in the number of patients per nurse, the measure of effort used here. The authors show that their results are also consistent with an extended version of the monopsony model that considers effort and allows for revenue shifts following a takeover. Finally, they find that these changes were similar in the largest for-profit and non-profit chains, suggesting that market forces are more important than institutional form.

Keywords: nurses, California hospitals, monopolies, for-profits and nonprofits

JEL Classification: I19, J41, J42

Suggested Citation

Currie, Janet and Farsi, Mehdi and MacLeod, William Bentley, Cut to the Bone? Hospital Takeovers and Nurse Employment Contracts. Industrial & Labor Relations Review, Vol. 58, No. 3, pp. 471-493, April 2005. Available at SSRN: https://ssrn.com/abstract=716521

Janet Currie (Contact Author)

Princeton University ( email )

Princeton, NJ 08544-1021
United States
6092587393 (Phone)

HOME PAGE: http://www.princeton.edu/~jcurrie

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA)

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

Mehdi Farsi

University of Neuchatel - Institute for Research in Economics (IRENE) ( email )

Pierre-à-Mazel 7
Neuchatel, 2000
Switzerland
+41 32 718 1450 (Phone)

William Bentley MacLeod

Columbia University - Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics ( email )

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

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
810
PlumX Metrics