Nurses' Labour Supply Elasticities: The Importance of Accounting for Extensive Margins

Barbara Hanel (), Guyonne Kalb and Anthony Scott ()
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Barbara Hanel: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, http://melbourneinstitute.com/staff/bhanel/default.html
Authors registered in the RePEc Author Service: Barbara Broadway ()

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: Many countries face a continuing shortage in nurses’ labour supply. Previous research suggests that nurses respond only weakly to changes in wages. However, the decision to exit or enter the nursing profession has not been taken into account in previous studies, although the occupational choice may be more responsive to wages than the labour supply decision at the intensive margin. We estimate a multi-sector model of nursing qualification holders’ labour supply in different occupations. A structural approach allows us to model the labour force participation decision, the occupational and shift-type choice, and the decision about hours worked as a joint outcome following from maximizing a utility function. Disutility from work is allowed to vary by occupation and also by shift type in the utility function. Furthermore, we allow the preference parameters in the utility function to vary by certain family characteristics and personality. This may be important because the high incidence of shift work, potentially impeding the balance of work and family life, and the high level of emotional and personal involvement required in the profession suggest that the labour supply of nurses might depend on their personality and their family circumstances. Our results suggest that average wage elasticities might be higher than previous research has found. This is mainly due to the effect of wages on the decision to enter or exit the profession, which was not included in the previous literature, rather than from its effect on increased working hours for those who already work in the profession. We find that the negative labour supply elasticities with respect to income are higher for nurses with children, while the positive elasticities with respect to wages are higher for low-qualified, older and childless nurses. Elasticities do not appear to vary by personality trait.

Keywords: Nursing; labour supply; shift work; wage elasticities (search for similar items in EconPapers)
JEL-codes: I10 I11 J22 J24 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2012-05
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Related works:
Journal Article: Nurses’ labour supply elasticities: The importance of accounting for extensive margins (2014)
Working Paper: Nurses' Labour Supply Elasticities: The Importance of Accounting for Extensive Margins (2012)
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