The deadly consequences of labor scarcity: Evidence from hospitals

This paper estimates the impact of nursing shortages in hospitals on healthcare provision and patient outcomes by exploiting a strong and stable appreciation of the Swiss franc in 2011. Due to collective bargaining hindering wage adjustments in the German healthcare sector, cross-border wage differentials increased and led to a significant outflow of German registered nurses to Switzerland, causing a 12.5% reduction in nurse staffing rates in German hospitals near the border. Using a matched difference-in-differences approach, I find that hospitals responded by decreasing care intensity, leading to a 12% decrease in surgeries. Although hospitals are increasingly performing triage, also patients with high medical needs - such as elderly and emergency cases - face a reduction in care and, consequently, a stark increase in mortality rates, resulting in a measurable decline in regional life expectancy.