Jinhyun Kim has completed his PhD in Health Economics from Seoul National University and Post-doctoral studies from Harvard School of Public Health. He is Professor of Health Policy and Economics at Seoul National University College of Nursing. He has published more than 300 papers in reputed journals and has been serving as an Editorial Board Member of repute as well as Health Policy Adviser to the Ministry of Health and Social Welfare and National Health Insurance Service.

Nurse shortage in hospitals has been a significant policy issue related to patient safety and family’s economic burden of caregivers of inpatients in Korea. In line with this, the Korean government introduced nurse staffing policy reform to improve the ratio of nurse to patient in general ward from less than 14~16 to above 8~12. It is optional for hospitals to join in the new nurse staffing scheme, and for hospitals fulfilled with required staffing level, a 130% of total labor cost is reimbursed by the national health insurance. This paper analyzed the economic effect of the reform on nurse employment in hospital industry. An input-output interindustry model was used to estimate the direct and indirect effects of the new policy on hiring nurses and data was collected from the national health insurance claims database. A total of 26,381 beds in hospitals joined in the new scheme and 12,381 registered nurses (RNs) and 6,194 assistant nurses (ANs) were hired, for which the insurance reimbursed 646.35 million dollars in the year of 2017. The job creation effect for RNs and ANs was estimated to be 74.7 persons including 28.7 persons directly and 46.0 persons indirectly per one million dollars’ expenditure. Compared with an average of 20.2 persons in total industry and 26.6 persons in health care industry per one million dollars’ expenditure, the new nurse staffing policy showed a job creation effect of as high as 281%~370%. The government is expected to support and extend the policy based on the performance.