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The supply and demand of motivated labor: When should we expect to see nonprofit wage gaps?

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  • Jones, Daniel B.

Abstract

Evidence on whether nonprofit workers earn less than for-profit workers is mixed. I argue that we should only expect wage gaps when labor demand of the nonprofit sector of an industry is low. When labor demand is high, there are not enough “motivated” workers to fulfill demand, so nonprofits must raise wages. I find empirical evidence consistent with these predictions. Penalties for working in a nonprofit are largest in areas where nonprofits require a small share of the labor force. In these same locations, the quality of work is higher than in for-profits.

Suggested Citation

  • Jones, Daniel B., 2015. "The supply and demand of motivated labor: When should we expect to see nonprofit wage gaps?," Labour Economics, Elsevier, vol. 32(C), pages 1-14.
  • Handle: RePEc:eee:labeco:v:32:y:2015:i:c:p:1-14
    DOI: 10.1016/j.labeco.2014.11.001
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:jhecon:v:55:y:2017:i:c:p:108-120 is not listed on IDEAS
    2. Barigozzi, Francesca & Burani, Nadia, 2016. "Competition and screening with motivated health professionals," Journal of Health Economics, Elsevier, vol. 50(C), pages 358-371.
    3. DeVaro, Jed & Maxwell, Nan & Morita, Hodaka, 2016. "Compensation and Intrinsic Motivation in Nonprofit and For-Profit Organizations," CEI Working Paper Series 2015-10, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    4. Hirsch, Barry & Macpherson, David A. & Preston, Anne E., 2017. "Nonprofit Wages: Theory and Evidence," IZA Discussion Papers 10571, Institute for the Study of Labor (IZA).
    5. F. Barigozzi & N. Burani, 2016. "Competition Between For-Profit and Non-Profit Firms: Incentives, Workers’ Self-Selection, and Wage Differentials," Working Papers wp1072, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. repec:eee:jeborg:v:139:y:2017:i:c:p:196-213 is not listed on IDEAS
    7. Jones, Daniel B. & Propper, Carol & Smith, Sarah, 2017. "Wolves in sheep’s clothing: Is non-profit status used to signal quality?," Journal of Health Economics, Elsevier, vol. 55(C), pages 108-120.
    8. Jonathan Morduch & Ariane Szafarz, 2018. "Earning to Give: Occupational Choice for Effective Altruists," Working Papers CEB 18-017, ULB -- Universite Libre de Bruxelles.

    More about this item

    Keywords

    Nonprofit wages; Intrinsic motivation; Nursing homes; Compensating differentials;

    JEL classification:

    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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