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Employees in the US Nonprofit Sector

Author

Listed:
  • Stephanie Karol
  • Jennifer Mayo

Abstract

The nonprofit sector employs roughly 10% of the American workforce, making it the third largest workforce behind the retail and manufacturing sectors. Despite this, relatively little is known about its employees. This paper is the first to use comprehensive administrative tax data, covering the near-universe of workers in the US, to quantify and explain the causes of the nonprofit pay differential. Unconditionally, we find the nonprofit earnings penalty to be 12% relative to for-profit workers. Estimating an “AKM” worker-firm job ladder model, we show that most of the penalty is causal and not driven by selection. We also document considerable heterogeneity across industries, both in terms of earnings premia/penalties and worker selection, and show that nonprofit and for-profit earnings have been converging over time.

Suggested Citation

  • Stephanie Karol & Jennifer Mayo, 2026. "Employees in the US Nonprofit Sector," Working Papers 26-33, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:26-33
    as

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    File URL: https://www2.census.gov/library/working-papers/2026/adrm/ces/CES-WP-26-33.pdf
    File Function: First version, 2026
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    References listed on IDEAS

    as
    1. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
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