December 2001

IZA DP No. 408: Nonprofit Sector and Part-Time Work: An Analysis of Employer-Employee Matched Data of Child Care Workers

published in: Review of Economics and Statistics, 2003, 85 (1), 38-50

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 for 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 manner in which human capital characteristics 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, and there exist nonprofit wage and compensation premiums, which support the property rights hypothesis.