Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 24/2014: Wages Anatomy: Labor Supply of Nurses and a Comparison with Physicians

Leif Andreassen , Maria Laura Di Tpmmaso and Steinar Strøm ()
Additional contact information
Leif Andreassen: Research Department, Statistics Norway,, Postal: Oslo , Norway
Maria Laura Di Tpmmaso: Dept. of Economics and Statistics “Cognetti de Martiis”, University of Torino, Postal: Lungo Dora Siena 100 , 10153 , Torino, Italy , and Collegio Carlo Alberto , Moncalieri , Torino, Italy
Steinar Strøm: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway, and Frisch Centre for Economic Research , Oslo , Norway

Abstract: We estimate a dynamic discrete choice model of Registered Nurses’ labor supply with random terms. A distinguished feature of our model is that random terms are correlated over time and jobs (habit persistence). Past options and not only the past optimal choices matter for the current choices. Given observed incentives, we find that nurses are mobile when they are young (less than physicians), but there is also a weak tendency of higher mobility again when they are approaching retirement age. Wage increases have a modest impact on labor supply. The overall elasticity for nurses is close to zero (like for physicians). These low elasticities shadow for stronger responses, shifting labor away from part time jobs in the public and private sector towards full time jobs in the private sector. A change in taxation away from the progressive tax system towards a flat tax of 28% gives Registered Nurses a very modest incentive to shift their job to private hospitals. For physicians the impact is stronger.

Keywords: Nurses’ labor supply; multi-sector; panel data

JEL-codes: C35; I10; J22

36 pages, November 30, 2014

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