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The labor market effects of California’s minimum nurse staffing law.

Health Economics. February 26, 2013

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In 2004, California became the first state to implement statewide minimum nurse‐to‐patient ratios in general hospitals. In spite of years of work to establish statewide staffing regulations, there is little evidence that the law was effective in attracting more nurses to the hospital workforce or improving patient outcomes. This paper examines the effects of this legislation on employment and wages of registered nurses. By using annual financial data from California hospitals, I show that nurse‐to‐patient ratios in medical/surgical units increased substantially following the staffing mandate. However, survey data from two nationally representative datasets indicate that the law had no effect on the aggregate number of registered nurses or the hours they worked in California hospitals, and at most a modest effect on wages. My findings suggest that offsetting changes in labor demand due to hospital closures, combined with reclassification of workers within hospitals, and mitigated the employment effects of California’s staffing regulation. This paper cautions that California’s experience with minimum nurse staffing legislation may not be generalizable to states considering similar policies in very different hospital markets.