Compensating Wage Differentials and AIDS Risk
- Presenter:
Chair: Gabriel Picone; Discussant: Sara Markowitz Tue June 6, 2006 10:45-12:15 Room 332
In the past two decades, AIDS has emerged as a top public health issue and had a profound effect on the health care sector; yet its impact on health care labor markets has not been studied. This paper examines how HIV infection risks affect the earnings of registered nurses (RNs) and other health care workers. From the standard theory of compensating wage differentials, we expect health care workers, particularly patient care providers, to require monetary compensation for the potential risk of contracting HIV and the burden of increased precautions required to avoid this risk, relative to similar jobs that do not involve HIV risk. Using annual CPS outgoing rotation group data from 1993– 2003, we estimate separate AIDS wage differentials for RNs, licensed practical nurses and nursing aides, and other non-physician health care workers. Our econometric specification allows both the wage effects of AIDS and wage trends to vary across sectors. We proxy for HIV infection risk proxy using state-specific AIDS prevalence rates, allocated to metropolitan areas using the fraction of state cumulative AIDS cases each year that occur in each metropolitan area, and include metropolitan area and year fixed effects in our regressions. Estimates show that a 10 percent rise in AIDS is associated with a wage increase, relative to workers outside the health care sector, of 1.3 percent for RNs and 0.9 percent for non-nursing health practitioners. Additional results suggest that these effects do not spuriously represent the impact of working in a hospital, are not driven by metropolitan areas with particularly high AIDS prevalence rates, and are unrelated to the introduction of antiretroviral drugs during the sample period. These findings imply that policies that reduce the prevalence of HIV and AIDS will reduce the wage necessary to attract individuals into jobs involving patient care; in particular, a 10 percent AIDS rate decline would save over $1 billion per year in RN wage payments.
