The rise and fall of customary wage differentials among nursing personnel in US hospitals: 1956–1985

Between 1956 and 1985, the employment of registered nurses (RNs) relative to other nursing personnel rose despite constant relative wages among RNs, licensed practical nurses, and nurses' aides. Over this thirty-year period, hospital management proclaimed chronic shortages of RNs. Economists have used monopsonistic models to explain the persistence of these shortages. As an alternative to the monopsonistic model, this paper presents an institutional argument for why hospital management sought to maintain relative wages among classes of nursing personnel while at the same time successfully raising the relative use of RNs through a variety of nonwage inducements and manipulations of RN supply.