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.
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