This dissertation attempts to provide a comprehensive understanding about the impacts of state minimum staffing standards and to determine unbiased estimates of the effect of staffing on quality of nursing home care. Specifically, by exploiting differences in the timing of staffing standard changes for the 50 states and the District of Columbia from 1998 to 2001, this study conducts three empirical analyses to examine (1) the total effects of staffing standards on staffing choices and on quality of care, (2) the total effect of staffing standards on financial performance, and (3) the underlying (causal) relationship between staffing and quality of care. The major findings are as follows: (1) Increases in staffing standards matter particularly for the subset of nursing homes with staffing level previously below or close to new standards, whereas the results show consistent beneficial effects for the rate of restraint use and the number of total deficiencies at all types of facilities. (2) Increases in staffing standards have significant negative impacts on total margin at nonprofit facilities with relatively low staffing. (3) When endogeneity of staffing is taken into account, the results support the persistent beneficial effects of increasing total staff hours on the onset of pressure sores, contractures, and catheter use. The analyses performed in this dissertation are particularly relevant to the era of growth in the aged population and provides important policy implications. Structural differences in nursing home behavior in response to increased staffing standards suggest that future policy should be developed by emphasizing on stragetic planning and operative management of scarce labor resources to achieve both better quality and greater efficiency. In order to achieve the benefits of mandatory staffing standards, the federal and state governments should determine the additional costs and develop a plan to adequately fund the required increases in staffing levels. The monitoring and enforcement of federal and state laws and regulations are necessary. Lastly, the findings suggest that differences in financial performance may result in differences in quality produced and vice versa. An integrative perspective which explores the relationship between quality and financial performance may be insightful in the future research.