Classic or new monopsony? Searching for evidence in nursing labor markets

Abstract

The market for registered nurses (RNs) is often offered as an example of "classic" monopsony, while a "new" monopsony literature emphasizes that firm labor supply is upward sloping independent of market structure. Using data from multiple sources, we explore the relationship between nursing wages in hospitals and measures of classic and new monopsony. Wage level analysis fails to provide support for classic monopsony, the relative wages of RNs in 240 U.S. labor markets being largely uncorrelated with hospital system concentration. Longitudinal analysis shows nursing wages declining with increases in hospital concentration. We interpret these results as providing support for classic monopsony effects in the short run, but question whether wage effects are sustained in the long run. No relationship is found between nursing wages and a new monopsony measure of mobility, but support for new monopsony is found for women elsewhere in the labor market. RNs display greater interemployer mobility than do women (or men) in general. Two conclusions follow. First, upward sloping labor supply need not imply monopsonistic outcomes. Second, absent more compelling evidence, nursing should not be held up as a prototypical example of monopsony-classic or new.

What can monopsony explain of the gender wage differential in Italy?

“…Including previous tenure controls further reduces the size of the coe¢ cients but not very much. 17 Then, I use the wage elasticity of separations to employment " e sw to recover the wage elasticity of recruits from employment " e Rw . The separation elasticity to non employment " n sw is estimated on the sample of changers for those that don't get a new job when moving.…”

“…This again suggests that the monopsony model in its dynamic (oligopsonistic) version can help to explain the wage gender di¤erential. 17 Here I don't consider any endogeneity issue for tenure. 20 …”

“…In this context, the abolition of the SM, and the subsequent increase in the 18 Sullivan (1989), Boal (1995), Falch (2003), Staiger et al (2004), and Hirsch and Schumacher (2004) are examples of applications of monopsony to di¤erent labour markets. The main idea of these studies is that of testing the theory using particular labour markets that can be considered as very close to the ideal textbook model of monopsony.…”

Theoretical Analysis of How to Resolve the Nursing Shortage in Japan

“…Their analyses conclude that the labor market for registered nurses is not a monopsony because nurses have considerable mobility between hospitals. Hirsch and Schumacher (2005) also indicate that when many new individuals enter a market, the market might have high mobility for workers, demonstrating a lower level of monopsony. It is also suggested that if the entry of employees comes from the unemployed (including inactive individuals considered in our framework), it would lead to weaker mobility for nurses between hospitals.…”

“…Although this does not necessarily mean we fully accept Heyes' model, vocation is a significant factor in our framework, as we focus on inactive nurses who have already obtained an assured level of skill and knowledge in this field and are temporarily out of work because of birth and childcare as opposed to newcomers without vocation. Hirsch and Schumacher (2005) explain that the market for registered nurses in the United States is an example of a monopsonistic labor market, where the larger the degree of monopsony, the lower the wage rate becomes. If monopsonistic power were stronger in this market, the wage rate would be lower than that of a competitive case, as pointed out by Hurd (1973) and Taylor (2007), meaning that nursing shortages would persist.…”