Supply and demand in action in the nursing market

Nurses Are Again in Demand
by: Melanie Evans
Nov 08, 2016
Click here to view the full article on WSJ.com

TOPICS: Supply and Demand

SUMMARY: After years of relative equilibrium, the job market for nurses is heating up in many markets, driving up wages and sign-on bonuses for the nation's fifth-largest occupation. "The last nursing shortage more than a decade ago ended when a surge of nursing graduates filled many positions, and the financial crisis of 2008 led older nurses to delay retirement. But as the economy improves, nurses who held on to jobs through the uneven recovery are now retiring or cutting back hours, say recruiters. The departures come as demand for nurses has increased, thanks to expanded insurance coverage from job growth and the Affordable Care Act."

CLASSROOM APPLICATION: Students can evaluate the causes of increases in both the demand for nurses and the supply of nurses. They can use supply and demand analysis to show that an increase in supply and demand can result in an increase in the equilibrium quantity of nurses and the equilibrium wage of nurses.

QUESTIONS: 
1. (Advanced) Is the supply of nurses increasing? Is the demand for nurses increases? Demonstrate that an increase in the demand for nurses and an increase in the supply of nurses can result in an increase in the equilibrium quantity of nurses.

2. (Advanced) What factors are causing wages for nurses to increase? Demonstrate that an increase in the demand for nurses and an increase in the supply of nurses can result in an increase in the equilibrium wage of nurses.

3. (Introductory) Why do employers pay signing bonuses as opposed to paying greater wages?

Reviewed By: James Dearden, Lehigh University