California's Minimum Nurse Staffing Law and its Effect on Hospital and Emergency Department Closure

In 1999, California became the first state to mandate minimum nurse-to-patient ratios for every unit in general acute care hospitals. Although this law increased hospitals' nurse- staffing levels, it precipitated a substantial rise in nurse wages as the short-run supply of nurse labor proved inelastic to the growing demand. We examine the behavior of California hospitals when confronted with rising wages for nurse labor and the inability to substitute away from this more expensive input due to nurse ratio mandates. We find evidence that California's minimum nurse-staffing law caused increased hospital and emergency department closures, with low nurse-staffing hospitals most affected