Do Wages Matter?: A Backward Bend in the 2004 California RN Labor Supply

Using data from the 2004 California Board of Registered Nursing Survey, a two-stage least-square equation was estimated to examine the effect of wages on hours worked by female registered nurses. Wages were found to have a nonlinear effect on hours worked, with a backward bending supply curve. Wages had a positive effect on the average hours worked per week up to $24.99 per hour and a negative effect between$30.00 and $100.00 per hour when compared with the wage category of$25.00 to $29.99. Results suggest that wages are important to secure the labor supply but do not increase aggregate supply beyond a wage threshold