Human Capital and Productivity in a Team Environment: Evidence from the Healthcare Sector

Using panel data from a large hospital system, this paper presents estimates of the productivity effects of human capital in a team production environment. Proxying nurses' general human capital by education and their unit-specific human capital by experience on the nursing unit, we find that greater amounts of both types of human capital significantly improve patient outcomes. Disruptions to team functioning attributable to the departure of experienced nurses, the absorption of new hires, and the inclusion of temporary contract nurses are associated with significant decreases in productivity beyond those attributable to changes in nurses' skill and experience.