Relative Quality of Foreign Nurses in the United States

The share of foreign educated nurses taking the US licensure examination for Registered Nurses increased from 6 percent in the mid-1980s to close to 20 percent in the mid-2000s. The composition of foreign nurses has also changed over time, and the Philippines has emerged as the single largest source of nurses educated abroad, representing more than half of foreign nurses entering the US in the last decade. With the nurse shortage projected to grow substantially in the near future, it is almost inevitable that the US will have to rely more heavily on foreign nurses to meet the demand.

Using Census data from 1970-2010, this paper analyzes the relative quality of foreign nurses and its evolution over time. We find a positive wage premium for nurses educated in the Philippines, but not for foreign nurses educated elsewhere. The premium reaches a maximum of 8 percent in 2000, and decreases to 4 percent in 2010. It cannot be explained by differences in demographics, education, location, or detailed job characteristics (setting, shift work or hospital unit). The assimilation profile of Filipino nurses and the type of hospitals and hospital units that hire them strongly suggest that the premium reflects quality differences and not just unobserved characteristics of the job that carry a higher wage but are unrelated to skill.

Next, we explore possible explanations for the wage premium and its evolution over time. We argue that the very high and heterogeneous return to choosing a nursing career in the Philippines-product of active support by the government to the migration of nurses- has generated strong positive selection into the occupation. Indirect measures of quality suggest that this is the case.

Finally, we find some suggestive evidence that the quality of native nurses declined for cohorts entering the labor market during the 1990s and recovered somewhat starting in the early 2000s, coinciding with the peak in the wage premium for Filipino nurses in 2000 and its further decline in 2010.