The Determinants of Child Care Workers' Wages and Compensation: Sectoral Differences, Human Capital, Race, Insiders and Outsiders

Abstract

This paper investigates the determinants of wages and compensation in child care centers for teachers and aides. Nonprofit status has no across-the-board impact on wages. The extent of the wage premium enjoyed by some nonprofit workers depends on the category of the nonprofit center, occupation of the workers, and their race. The rate of return to an additional year of tenure is 2 percent for both teachers and aides. The return to prior experience is one percent for teachers and zero for aides. An additional year of general education brings about a 5 percent increase in teacher wages, and half of that amount in aide wages. Specialized training influences teacher wages, but has less impact on aide wages. Unionization has a large impact on both wages and compensation of teachers and aides. Alternative wages of the workers are positively related to teacher and aide wages. An increase in local unemployment decreases aides' wages, but has a positive impact on the wages of teachers. There is evidence of profit sharing in the case of aides, but not teachers. An increase in center size positively impacts teacher wages. This body of evidence indicates both teacher and aide remuneration have non-competitive flavors, where the case is more compelling for aides.