Foreign Born Nurses: An Analysis of Effects On The U.S Nursing Labor Market.*

While the U.S nursing labor market has been the subject of previous research, the wage trends observed in this market remain unexplained. For many years the nursing labor market has been characterized by shortages which have led to an increase in the number of foreign born nurses. The main aim of this paper is two fold: I estimate the impact of high skilled immigration in the U.S nursing labor market and then explore if immigration can explain the observed wage trends. This paper develops a theoretical model that factors in the impact of immigration on the labor market outcomes of nurses. Using data from the Current Population Survey for the period 1994-2005, the elasticities of substitution between high skilled and low skilled as well as between migrant and natives within a skill group are estimated. The results suggest that migrant and native registered nurses are perfect substitutes, and simulations suggest that 10% immigration induced increase in the immigrant supply leads to no change on the wages of native workers and depresses the wages of immigrant workers by less than 0.05%. *I am indebted to my advisor McKinley Blackburn for all his support and guidance. I am grateful for valuable suggestions from Orgul Demet Ozturk and Melayne McInnes. I thank Srideep Ganguly and Elsa Marques for their patience with reading numerous drafts and for helpful comments on the direction of the paper. All errors are mine. #Corresponding author: Sheila Murthy Department of Economics, University of South Carolina, Columbia, SC-29208. [email protected]