The Wage and Job Impacts of Hospitals on Local Labor Markets

Abstract

This study examines the impact of hospitals on local labor markets in rural and urban counties. We measure the ability of hospitals, particularly in rural communities, to attract nonhealth-related employment and provide higher wage jobs to residents based on their education level. Results find hospital employees with an associate’s degree can expect a 21.4% wage premium, when compared with alternative opportunities, and those with a bachelor’s degree can earn 12.2% more working in a hospital. Hospitals are shown to be positively related to overall employment as well as exhibit positive employment spillover. For rural counties, a short-term general hospital is associated with 559 jobs in the county, 60 of which are hospital based and 499 are non–health care related. With the positive benefits on wages and non–health care job growth, hospitals have measurable positive labor market outcomes above their primary objective of providing health care access, particularly in rural counties.

Types of Anchor Institution Initiatives

“…County employment was regressed on county-level characteristics, the number of hospitals in the county, and year and county-level fixed effects. Job growth in non-health related sectors tended to be higher in areas with hospitals (Mandich & Dorfman, 2017). Lacking a strong identification strategy, Mandich and Dorfman's (2017) estimates should not be interpreted causally, but their results match the anchor literature broadly.…”

“…Job growth in non-health related sectors tended to be higher in areas with hospitals (Mandich & Dorfman, 2017). Lacking a strong identification strategy, Mandich and Dorfman's (2017) estimates should not be interpreted causally, but their results match the anchor literature broadly.…”

“…The most commonly cited type of anchor institution other than universities are hospitals (Dubb & Howard, 2012;Hodges & Dubb, 2012). Mandich and Dorfman (2017) studied the relationship between hospitals and local labor markets using individual-level census data and county-level hospital employment data, an analysis focused on wage premiums and job growth. The authors calculated wage premiums using multiple regression, regressing log wage on a dummy indicator of whether the individual was employed at a hospital, individual characteristics, and level of education.…”

“…The authors calculated wage premiums using multiple regression, regressing log wage on a dummy indicator of whether the individual was employed at a hospital, individual characteristics, and level of education. Mandich and Dorfman (2017) find hospitals offer high wage premiums for not only doctors but bachelor and associate degree holders as well. The authors also examined the relationship between the number of hospitals and local employment using fixed effects.…”

The economic effects of rural hospital closures

“…Hospitals are cornerstones of many rural communities. In addition to medical care, rural hospitals often provide boosts to local employment, 1 income, 1,2 and population growth 3 . The typical rural hospital is estimated to supply approximately 5% of total county employment, which includes a mixture of hospital‐based professions (e.g., physicians, nurses) and professions outside of health care (e.g., construction) 1 .…”