Nonprofit Sector and Part-Time Work: An Analysis of Employer-Employee Matched Data of Child Care Workers

Abstract

This paper uses a rich employer-employee matched data set to investigate the existence and the extent of nonprofit and part-time wage and compensation differentials in child care. The empirical strategy adjusts for workers' self-selection into the for-profit or nonprofit sectors, into full-time or part-time work, as well as unobserved worker heterogeneity using a discrete factor model. We find differences between the regimes (full-time for-profit, full-time nonprofit, part-time for-profit, part-time nonprofit) in the way in which human capital of the workers are rewarded. There is substantial variation in wages as a function of employee characteristics, and there is variation in wages within sectors. The results indicate that part-time jobs are good' jobs in center-based child care. Furthermore, despite the evidence supporting the labor donation hypothesis, our results indicate the existence of nonprofit wage and compensation premiums, which support the property rights hypothesis.