Can pay regulation kill? Panel data evidence on the effect of labor markets on hospital performance

Published by the Centre for Economic Performance (CEP), this paper exploits panel data from the population of English acute hospitals where pay for medical staff is almost flat across the country. The authors predict that areas with higher outside wages should suffer from problems of recruiting, retaining and motivating high quality workers and this should harm hospital performance. The authors argue that stronger local labour markets significantly worsen hospital outcomes in terms of quality and productivity. (CEP - publication abstract)