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Nonprofit Wages: Theory and Evidence

Author

Listed:
  • Hirsch, Barry

    (Georgia State University)

  • Macpherson, David A.

    (Trinity University)

  • Preston, Anne E.

    (Haverford College)

Abstract

The nonprofit sector's share of wage and salary employment in the U.S. has increased over time, from about 5½ percent in the mid-1990s to 7 percent in 2015. This paper surveys the literature and presents new evidence on the employment and earnings of workers in the nonprofit sector since 1994. As compared to the private for-profit sector, nonprofits have a more educated and older workforce, with employment concentrated in health, education, and service occupations and industries. Standard wage level analysis indicates lower wages for men employed in nonprofits compared to male for-profit workers with similar measured attributes. No such penalty is found for women. Based on panel estimates of wage changes, we find no substantive wage penalties for either women or men moving between jobs in and outside the nonprofit sector. We conclude that wages in the nonprofit and for-profit sectors, on average, differ little for similar workers and jobs.

Suggested Citation

  • Hirsch, Barry & Macpherson, David A. & Preston, Anne E., 2017. "Nonprofit Wages: Theory and Evidence," IZA Discussion Papers 10571, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10571
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    References listed on IDEAS

    as
    1. Hirsch, Barry & Manzella, Julia, 2014. "Who Cares – and Does It Matter? Measuring Wage Penalties for Caring Work," IZA Discussion Papers 8388, Institute of Labor Economics (IZA).
    2. Glaeser, Edward L. & Shleifer, Andrei, 2001. "Not-for-profit entrepreneurs," Journal of Public Economics, Elsevier, vol. 81(1), pages 99-115, July.
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    4. Christopher R. Bollinger & Barry T. Hirsch, 2013. "Is Earnings Nonresponse Ignorable?," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 407-416, May.
    5. Leete, Laura, 2000. "Wage equity and employee motivation in nonprofit and for-profit organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 43(4), pages 423-446, December.
    6. Preston, Anne E, 1988. "The Effects of Property Rights on Labor Costs of Nonprofit Firms: An Application to the Day Care Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 337-350, March.
    7. Roomkin, Myron J & Weisbrod, Burton A, 1999. "Managerial Compensation and Incentives in For-Profit and Nonprofit Hospitals," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(3), pages 750-781, October.
    8. 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.
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    More about this item

    Keywords

    nonprofit wage differentials; nonprofit employment; Current Population Survey (CPS);
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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