Compensation in the Nonprofit Sector

45 Pages Posted: 5 May 2000 Last revised: 1 Mar 2021

See all articles by Christopher J. Ruhm

Christopher J. Ruhm

University of Virginia - Frank Batten School of Leadership and Public Policy; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Carey Borkoski

University of North Carolina (UNC) at Greensboro - Department of Economics

Date Written: February 2000

Abstract

This analysis provides an in-depth investigation of the determinants of pay in the nonprofit sector. The main findings are as follows. First, holding constant individual characteristics, average weekly wages are 11 percent lower in nonprofit than for-profit jobs. However, this difference is entirely explained by the concentration of nonprofit employment in relatively low paid industries. Second, an accompanying longitudinal analysis, focusing on movements of workers between nonprofit and profit-seeking employers, suggests a nonprofit penalty of between 2 and 4 percent. Third, nonprofit workers in three specific industries (hospitals, nursing/personal care facilities, social services) earn as much or more than their for-profit counterparts. However, the effects of changing the type of employment varies substantially across the three industries. These results raise questions about several predominant models of nonprofit wage-setting.

Suggested Citation

Ruhm, Christopher J. and Borkoski, Carey, Compensation in the Nonprofit Sector (February 2000). NBER Working Paper No. w7562, Available at SSRN: https://ssrn.com/abstract=217536

Christopher J. Ruhm (Contact Author)

University of Virginia - Frank Batten School of Leadership and Public Policy ( email )

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HOME PAGE: http://batten.virginia.edu/cruhm.html

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IZA Institute of Labor Economics ( email )

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Carey Borkoski

University of North Carolina (UNC) at Greensboro - Department of Economics ( email )

P.O. Box 26165
Greensboro, NC 27402-6165
United States

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