Relative Wages and the Returns to Education in the Labor Market for Registered Nurses

Abstract

This paper examines the labor market for registered nurses using data from the Current Population Survey from 1973 through 1994 and the Sample Survey of Registered Nurses for 1984, 1988 and 1992. Major changes in the hospital industry including movement to primary care nursing, Medicare's Prospective Payment System, and technological development led hospitals to use a higher proportion of RNs in providing care. As a consequence, the real wages of RNs increased substantially throughout the 1980s and early 1990s, as compared to college educated females in non-health related occupations. As health-care expenditures have fallen and as long run adjustments have occurred, the wage gains to RNs peaked in the early 1990s. RNs experienced declines in both real and relative wages in 1994. Previous estimates of the return to nursing education do not consider the payoff from non-nursing training. Non-nursing post-secondary education has value in nursing labor markets, but its omission does not seriously bias estimated returns to the BS in nursing.

JEL Classification: I19, J31, J44