Impact of Individual and Institutional Factors on Wage Rate for Nurses in Canada: Is There a Monopsony Market?

Ruolz Ariste and Ali Bejaoui

No 170010, Working Papers from Canadian Centre for Health Economics

Abstract: Several studies and media sources often report a labour shortage in the nursing profession. Given this shortage, one might assume that registered nurses (RNs) would have a perspective of maximizing wage income: increase the hourly wage or the number of hours worked. Institutional incentives in place can influence these two components, particularly the hourly wage. However, previous studies of Canadian nurse wages were limited to individual factors and did not take into account contextual factors such as hospital market share, labour market size or unionization. Based on market share, some refer to the nursing labour market as a monopsony; which depresses wages and might explain the shortage. However, this has not yet been tested empirically in the Canadian RN labour market. This article aims to fill this gap by using the confidential microdata files of the Labour Force Survey (LFS) for the years 2010 to 2012 and the multi-level analysis to shed light on this issue. The contribution of this work is that it takes into account both individual and contextual variables to try to explain nurses' hourly wage. In accordance with the monopsony model, we hypothesize a negative correlation between hourly wage and level of market share; i.e. monopsony employers would pay a lower wage rate. The results do not support the monopsony model to explain nursing labour shortage: there is no statistically significant relation between RNs wages and market share; no relation was found for market size either. This suggests explanation for RN labour shortage must be investigated elsewhere.

JEL-codes: I11 I18 J31 J38 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2017-07
New Economics Papers: this item is included in nep-lma
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Published in International Review of Applied Economics, November 2018, pages 1-23

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