Are Foreign-Trained Nurses Perfect Substitutes for U.S.-Trained Nurses?

Abstract

The authors investigate whether foreign- and U.S.-trained nurses are substitutes by studying the differences in their wages and whether wage differentials respond to relative supplies of foreign- and U.S.-trained nurses. Regression estimates suggest that foreign-trained nurses without a bachelor’s degree enjoy a wage premium of 1 to 3% over similar U.S.-trained nurses after adjusting for demographic, workplace, work type, and geographic differences, but no wage difference remains among those with a bachelor’s degree. For all nurses combined, the wage difference is modest and statistically insignificant. This result suggests that foreign- and U.S.-trained nurses are equally productive and close substitutes. The authors also test explicitly for whether foreign- and U.S.-trained nurses are substitutes and cannot reject the hypothesis that they are.