Can Human Capital Theory Explain why Nurses are so Poorly Paid?

Margaret J. Nowak and Alison C. Preston

Australian Economic Papers, 2001, vol. 40, issue 2, 232-245

Abstract: This paper uses Australian Census data to examine the earnings of female professionals. Comparisons are made between Registered Nurses (RNs), Teachers, Social Professionals, Health Professionals and Business Professionals. Wage decompositions show that RNs earn significantly less than other female Professionals and that the observed differentials can not be explained by differences in human capital endowments. The evidence presented is strongly suggestive of monopsonist or oligopsonist power in the setting of nurse wages – with a manifestation being persistent labour market disequilibrium. Changing the relative reward structure for nurses may help address the on‐going nursing ‘shortage’ in Australia, although further research in this area is called for.

Date: 2001
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