The Policy Evolution of Nurses in Japan: An Economic Analysis

This paper analyzes the policy evolution of nurses and the effects from a labor market viewpoint for nurses.<BR>In Japan, three conditions have contributed to the 'nurse shortage'problems. The first problem arose from an expansion of demand because many medical facilities were built with the intention of supplying increased medical care services after the World War II. The second problem occurred when the nurses staffing scheme was introduced by the Ministry of Health and Welfare (MWH), thus the MWH has regulated the number (this is the existing regulation) and the percentage of nurses to the number of inpatients. The additional fees, so called“nursing fee”depended on staffing standards from the scheme implemented in 1958. The third problem was exacerbated by the additional expansion of demand for more hospital beds as a result of the“Medical Law”reform in 1985. It takes time for the labor market to achieve equilibrium despite the demand increases (demand curve shifts), thus giving rise to a dynamic shortage. However, the labor market for nurses is generally considered a monopsony or oligopsony in which the employer holds“market power”except in the cities. And under these conditions, a nurse shortage may occur frequently.<BR>The MHW has made the policies which increases labor supply'of nurses with the other ministries and authorities whenever“shortage”problems occur. One of the policies is increasing the labor flow, for example, raising salary and improving working conditions. Another one is increasing labor stock for example increasing the number of the special schools and their capacity. These policies can decrease what the employers regard as“shortage”as well as the dynamic shortage. But these do not directly change the monopsonistic or oligopsonistic market into a competitive one Furthermore, the MHW established new advanced staffing standards, and also raised the“nursing fee”for increasing salaries and improving working conditions in response to the third“shortage”. This policy seems to increase demand by reducing the relative price of nursing to other inputs (the effect of subsidy on nurses employed by hospitals)