Volume 38, Number 4 (Fall) 2003

Ruhm, Christopher J., and Carey Borkoski. 2003. "Compensation in the Nonprofit Sector." Journal of Human Resources 38(4):.

We investigate the determinants of pay in the nonprofit sector using data for 25-55 year olds from the 1994-1988 Current Population Survey Outgoing Rotation Groups. Our results are consistent with the hypothesis that compensation is primarily determined in competitive markets without "labor donations" to nonprofit employers. One implication is that nonprofit workers receive virtually the same wages as observationally equivalent employees in similar positions with profit-seeking enterprises. We can not rule out the possibility of nonprofit penalties or premiums for selected groups; however, the differentials are generally small and competition appears to play a dominant role in nonprofit wage setting.
 

Christopher J. Ruhm is a professor of economics at the University of North Carolina at Greensboro, Greensboro, NC 27402-6165 and a research associate at the National Bureau of Economic Research. Carey Borkoski is a Ph.D. student in the policy science program at the University of Maryland, Baltimore County. We thank Peter Bearse, Richard Frank, H.E. Frech III, Dan Rosenbaum, Doug Staiger, and Burton Weisbrod for helpful comments and William Black for research assistance. Ruhm gratefully acknowledges financial support from the National Science Foundation (SES-9876511) and from an NBER faculty fellowship for the study of nonprofit institutions. The data used in this article can be obtained beginning April 2004 through March 2007 from Ruhm.