Can wage regulation be deadly?

A study forthcoming in the Journal of Political Economy suggests that government regulation of nurses’ pay leads to higher death rates in U.K. hospitals.

The U.K.’s National Health Service (NHS), which is responsible for most of the nation’s health care, sets wages for nurses and other health professionals on a national scale. These regulated wages are essentially flat throughout the country, despite the fact that wages for private sector jobs vary widely from region to region. The study finds that in places where private sector wages are higher, death rates for heart attack victims admitted to emergency departments are higher.

The finding suggests that in places where private sector pay is better, it is difficult for NHS hospitals “to attract and retain skilled workers and this will lead to lower quality service,” write the study’s authors, Carol Propper of the University of Bristol and John Van Reenen of the Centre for Economic Performance at the London School of Economics.

On average, a 10 percent increase in the private sector wages is associated with a 7 percent increase in heart attack death rates, the study found. Heart attack death rates are a common measure of hospital quality.

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