Borjas, George J, H. E. Frech III, and Paul B. Ginsburg. 1983. "Property Rights and Wages: The Case of Nursing Homes." Journal of Human Resources 18(2):231-246.

In this paper we develop the implications of the property rights theory of the firm for wage determination and test the model using data from the U.S. nursing home industry. The main theoretical prediction is that any attenuation of property rights will lead to higher wage rates for the firm's employees. The empirical evidence indicates that, indeed, profit-maximizing nursing homes do pay the lowest wage rates (for given quality labor), and that the stronger the cost-minimizing incentives provided by Medicaid reimbursement programs, the lower the wage rate paid by these nursing homes.

Borjas and Frech are Professors of Economics. University of California, Santa Barbara. Ginsburg is Chief, Income Security and Health Unit. Congressional Budget Office.
Thanks for support are due to the National Center for Health Services Research, U.S. Department of Health and Human Services, under Grant No. 1 RO1 HS 02674-02, and the University of California, Santa Barbara Committee on Research. John M. Marshall and Linda N. Edwards provided valuable comments.

© 2003 by the Board of Regents of the University of Wisconsin System

US ISSN 0022-166X

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