[I just joined your List but have been on another, Healthre, for
years...in the US; this topic...'opsony....has been getting more
attention from Healthre recently.]
I think this paper is very interesting; it's a little arcane to me--I'm a
pathologist with an econ hobby--but I think it shows what some our List
nurses have suspected: they are often stuck with a few local purchasers of
their services--oligopsonists--who can affect,'make', their wages.
Note how the other local hospital had to increase its wages. The market
for nurse services was too small and no one is 'taking' prices, as would
happen in a large nurse market with many firms demanding their services.
It seems right out of the textbook.
The dead weight is that both hospitals are probably not purchasing as many
total nursing hours as they would in a free labor--factor--market. So the
local populace suffers under 'opsony' just as they would under an opoly.
To fight this, nurses should try to make their services more elastic,
i.e., quit if they are not offered enough, move from hospital to
hospital, strike, whatever....make a ruckus.
Bill
W O R K I N G P A P E R A B S T R A C T S
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"Is There Monopsony in the Labor Market? Evidence from a Natural
Experiment"
BY: DOUGLAS STAIGER
Dartmouth College
Department of Economics
National Bureau of Economic Research (NBER)
JOANNE SPETZ
National Bureau of Economic Research (NBER)
CIARAN PHIBBS
Health Economics Resource Center (152)
Stanford University
School of Medicine
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=202434
Paper ID: NBER Working Paper No. 7258
Date: July 1999
Contact: DOUGLAS STAIGER
Email: Mailto:[log in to unmask]
Postal: Dartmouth College
Department of Economics
Hanover, NH 03755 USA
Co-Auth: JOANNE SPETZ
Email: not available
Postal: National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138 USA
Co-Auth: CIARAN PHIBBS
Email: Mailto:[log in to unmask]
Postal: Health Economics Resource Center (152)
VA Medical Center
795 Willow Road
Menlo Park, CA 94025 USA
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
A variety of recent theoretical and empirical advances have
renewed interest in monopsonistic models of the labor market.
However, there is little direct empirical support for these
models, even in labor markets that are textbook examples of
monopsony. We use an exogenous change in wages at Veterans
Affairs hospitals as a natural experiment to investigate the
extent of monopsony in the nurse labor market. In contrast to
much of the prior literature, we estimate that labor supply to
individual hospitals is quite inelastic, with short-run
elasticity around 0.1. We also find that non-VA hospitals
responded to the VA wage change by changing their own wages.
JEL Classification: J42, I11, L13
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