Classic Monopsony or New Monopsony? Searching for Evidence in Nursing Labor Markets

Barry Hirsch () and Edward J. Schumacher ()
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Edward J. Schumacher: Trinity University

No 1154, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The market for hospital registered nurses (RNs) is often offered as an example of "classic" monopsony, while a "new" monopsony literature emphasizes firm labor supply being upward-sloping for reasons other than market structure. Using data from several sources, we explore the relationship between wages and measures of classic and new monopsony. Micro wage data for 1993-2002 provide little evidence of classic monopsonistic outcomes in the long run, the relative wages of RNs in 240 U.S. labor markets being largely uncorrelated with market size or employer concentration. A short-run relationship is found, with RN wages declining in markets with increased hospital system concentration. Measures of new monopsony use data on mobility to proxy inverse supply elasticities. No relationship is found between these measure and nursing wages, but evidence supporting new monopsony is found for women elsewhere in the labor market. RNs display greater inter-employer mobility than do women (or men) in general. Two conclusions follow. First, evidence of upward sloping labor supply need not imply monopsonistic outcomes. Second, nursing should not be held up as a prototypical example of monopsony.

Keywords: monopsony; nurses; wages; hospitals (search for similar items in EconPapers)
JEL-codes: I10 J30 J42 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2004-05
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Citations: View citations in EconPapers (5)

Published - published in: Journal of Health Economics, 2005, 24 (5), 969-989

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