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The European Journal of Health Economics
Published in: The European Journal of Health Economics 6/2016

01-07-2016 | Original Paper

Pay or conditions? The role of workplace characteristics in nurses’ labor supply

Authors: Barbara Eberth, Robert F. Elliott, Diane Skåtun

Published in: The European Journal of Health Economics | Issue 6/2016

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Abstract

Empirically rigorous studies of nursing labor supply have to date relied on extant secondary data and focused almost exclusively on the role of pay. Yet the conditions under which nurses work and the timing and convenience of the hours they work are also important determinants of labor supply. Where there are national pay structures and pay structures are relatively inflexible, as in nursing in European countries, these factors become more important. One of the principal ways in which employers can improve the relative attractiveness of nursing jobs is by changing these other conditions of employment. This study uses new primary data to estimate an extended model of nursing labor supply. It is the first to explore whether and how measures of non-pecuniary workplace characteristics and observed individual (worker) heterogeneity over non–pecuniary job aspects impact estimates of the elasticity of hours with respect to wages. Our results have implications for the future sustainability of an adequately sized nurse workforce and patient care especially at a time when European healthcare systems are confronted with severe financial pressures that have resulted in squeezes in levels of healthcare funding.
Appendix
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Footnotes
1
While “Agenda for Change” does have provision for recruitment and retention premia at the national and local levels, limited use has been made of this option. The new system explicitly sets out criteria and procedure for offering premia and as such can be argued will tend to make the pay structure more rigid than under the previous system where drift may adjust for local labor market conditions.
 
2
Previous studies on nurses’ labor supply that have used secondary data were also based on relatively small samples. Skåtun et al. [3] used information on 1076 nurses from the Quarterly Labour Force Survey whilst Rice [8] based his study on 287 nurses and midwives in the British Household Panel Survey.
 
3
We acknowledge that accepting the null hypothesis of no selectivity bias does not come as a surprise and may simply be an artefact of the sampling given that 95 % of the sample of nurses participate in the NHS nursing labor market and hence the correction for the participation decision is unlikely to ‘fully’ correct for the decision to supply labor as a nurse or in other occupations.
 
4
The results of the selectivity-corrected hours model are available as additional material. Note also that the parameter estimates are quite stable across the different model specifications.
 
5
This was particularly an issue with the introduction of the new pay and grading structure where not all respondents were necessarily aware of the new terminology. Respondents were therefore given the choice of providing their earnings through bands, grades, and/or points with additional choices for where on the grade/band spectrum if no specific point was known. Information on band or grade, point, or range within scales was used in conjunction with published pay bands and points as of November 2007.
 
6
These include unemployment, child, housing/council, incapacity or any other state benefits as well as income support, child tax credit, working tax credit, job seekers allowance, statutory sick pay and maternity allowance/statutory maternity pay.
 
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Metadata
Title
Pay or conditions? The role of workplace characteristics in nurses’ labor supply
Authors
Barbara Eberth
Robert F. Elliott
Diane Skåtun
Publication date
01-07-2016
Publisher
Springer Berlin Heidelberg
Published in
The European Journal of Health Economics / Issue 6/2016
Print ISSN: 1618-7598
Electronic ISSN: 1618-7601
DOI
https://doi.org/10.1007/s10198-015-0733-6

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