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Research Paper HEDG Working Papers 05/10

The labour supply of nurses in the UK: evidence from the British Household Panel Survey


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This paper investigates the determinants of the labour supply of nurses in
the UK. Attention focuses on the elasticity of hours of work supplied with
respect to wage rates. This is achieved using nine waves of data from the
British Household Panel Survey. The panel nature of this survey allows us
to control for individual unobserved heterogeneity thus reducing the
problems encountered in models of labour supply caused by omitted
variable bias. We account for the endogenous nature of wages by using 2-
stage least squares. Tests for and control of selection bias are achieved
using methods based on variable addition tests for panel data. We find
that the elasticity of hours supplied with respect to wage is 0.40
suggesting that moderate increases in nurse hours supplied could be
achieved by increases in wage rates.


Labour Market, Wages And Earnings, and Health



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