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 andthe extent of nonprofit and part-time wage and compensation differentials in child care. Theempirical strategy adjusts for workers’ self-selection into the for-profit or nonprofit sectors,into full-time or part-time work, as well as for unobserved worker heterogeneity using adiscrete factor model. We find differences between the regimes (full-time for-profit, full-timenonprofit, part-time for-profit, part-time nonprofit) in the manner in which human capitalcharacteristics of the workers are rewarded. There is substantial variation in wages as afunction of employee characteristics, and there is variation in wages within sectors. Theresults indicate that part-time jobs are “good” jobs in center-based child care, and there existnonprofit wage and compensation premiums, which support the property rights hypothesis.

Keywords: employment, Nonprofit sector, child care

JEL Classification: J2, J3, J5, L3