Document Type

Master's Culminating Experience

Publication Date



This paper examines the factors that explain differences in earnings among RN’s. In addition, it also looks at the factors that determine the level of job satisfaction among RN’s and examines the factors that determine the probability of leaving the nursing profession. The analysis of RN wage rates shows that nurses who have a 4-year college degree receive a wage premium. However, the results also show that the premium is reduced for nurses who are employed in hospitals. This finding is consistent with the hypothesis that nursing wages are subject to monoposony power in a hospital setting. In fact, the reduction in the wage premium has increased over time which suggests that monopsony power has increased. The analysis of job satisfaction and of the probability of leaving the nursing profession reveal that subjective variables like job satisfaction contain useful information for predicting and understanding individual behavior. Job satisfaction is the most important variable in predicting the probability that a nurse will leave the nursing profession. Together these results suggest that the nursing shortage can be alleviated by policies that will result in higher wages for nurses as well as policies aimed at redesigning nurses’ jobs to give them a higher level of satisfaction.