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Are Recessions Good for Staffing in Nursing Homes?

R. Tamara Konetzka, Karen B. Lasater, Edward Norton and Rachel M. Werner
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R. Tamara Konetzka: Department of Public Health Sciences, University of Chicago
Karen B. Lasater: Center for Health Outcomes and Policy Research, School of Nursing, University of Pennsylvania
Rachel M. Werner: Division of General Internal Medicine and Leonard Davis Institute of Health Economics, University of Pennsylvania Author email:

American Journal of Health Economics, 2018, vol. 4, issue 4, 411-432

Abstract: The quality and cost of care in nursing homes depend critically on the number and types of nurses. Recent research suggests that the nursing supply adjusts to macroeconomic conditions. However, prior work has failed to consider the effect of macroeconomic conditions on demand for nurses through the effect on revenues. We test how county-level unemployment rates affect direct-care staffing rates in nursing homes using California data. We exploit the wide variation in the unemployment rates across counties and over time in 2005–12. We also test whether there are heterogeneous effects of unemployment rates by facility size, staffing level, and profit status. We find that as unemployment rates increase, staffing by registered nurses (RNs) decreases but staffing by licensed practical nurses (LPNs) increases. The increase in LPNs is larger in large nursing homes, nursing homes with higher staffing levels, and in for-profit nursing homes. We also find that as unemployment rates increase, nursing home revenue decreases. While the effect of macroeconomic conditions on nursing supply may be important for cost and quality of care, the mechanism is not simple, direct, or homogeneous for all types of nurses and nursing homes.

Keywords: recessions; business cycles; nursing homes; nurses (search for similar items in EconPapers)
JEL-codes: E32 I11 J44 L84 (search for similar items in EconPapers)
Date: 2018
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