Reassessing the labor market effects of California's minimum nurse staffing regulations

Abstract

California implemented hospital‐unit level licensed nurse minimum staffing regulations in 2004, with more stringent regulations applying for certain units in 2005 and 2008. All analyses agree that there were significant increases in Registered Nurse (RN) staffing levels, especially in hospitals with lower preregulation staffing. Analyses of the labor market effects of the regulations, however, come to mixed conclusions. I revisit the labor market effects of the regulations using different data and a different analytical model for RN wages. For the analysis of growth of RN employment, I use information from the National Sample Survey of Registered Nurses, the largest and most complete source of information on nurse employment, and find that RN employment grew significantly faster in California than in other states after the regulations were implemented. For the analysis of changes in RN wages, I apply a panel difference‐in‐difference‐in‐difference model to wage averages in Metropolitan Statistical Areas, controlling for MSA‐, occupation‐, and time‐fixed effects, and all their two‐way interactions. Analysis of changes in the differential between RN wages and wages in four other selected occupations indicates significant growth in RN wages after the regulations were implemented.