The economics of vocation or ‘why is a badly paid nurse a good nurse’?

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Abstract

Given the longstanding shortage of nurses in many jurisdictions, why could not nursing wages be raised to attract more people into the profession? We tell a story in which the status of nursing as a ‘vocation’ implies that increasing wages reduces the average quality of applicants attracted. The underlying mechanism accords with the notion that increasing wages might attract the ‘wrong sort’ of people into the profession and highlights an (in)efficiency wage mechanism, particular to vocations, which makes wages sticky up wards. The analysis has implications for job design in vocation-based sectors such as nursing and teaching.

Section snippets

A simple (in)efficiency wage story

What do we mean when we say that somebody has a ‘vocation’ for nursing (or teaching, or working with the handicapped)? We take it to mean two things, that (a) that person is particularly devoted, going ‘beyond the call of duty’ in doing their job, and (b) they do the job because they like doing it or feel a need to do it (they ‘care’).1

Example: nurses in a monopoly NHS

Suppose there exists a monopoly supplier of health called a National Health Service (NHS).

The supply of nurses is denoted L(w,γ) where w is the wage and 0γ1 is a job content variable which measures the fraction of a nurses working day spent ‘at the bedside’ (tb) or in direct contact with patients. The rest of a nurse’s day is spent on other tasks not involving direct contact patient care which we label ‘administration’ (ta).

A nurse without a vocation is assumed indifferent between time spent

Conclusions

This short paper has provided a simple mechanism for why increasing wages paid to workers in vocation-intensive sectors (such as nursing and teaching) may be more costly than just the additional payroll cost. Other things being equal, a lowly paid nurse is more likely to have a vocation, and so over-perform in his role, than a highly paid one. This accords with our intuition that a higher wage may attract the ‘wrong sort’ of person.

The analysis is clearly limited in a number of ways. The

Acknowledgements

I am grateful to Jeff Frank, Craig Brett, Peth Tuppe, Julie Nelson and two referees from this journal for helpful comments, and the ‘Ruby Team’ midwives at St. Peters Hospital, Chertsey, for inspiration.

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