Employees in the US Nonprofit Sector

Stephanie Karol and Jennifer Mayo

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: The nonprofit sector employs roughly 10% of the American workforce, making it the third largest workforce behind the retail and manufacturing sectors. Despite this, relatively little is known about its employees. This paper is the first to use comprehensive administrative tax data, covering the near-universe of workers in the US, to quantify and explain the causes of the nonprofit pay differential. Unconditionally, we find the nonprofit earnings penalty to be 12% relative to for-profit workers. Estimating an “AKM” worker-firm job ladder model, we show that most of the penalty is causal and not driven by selection. We also document considerable heterogeneity across industries, both in terms of earnings premia/penalties and worker selection, and show that nonprofit and for-profit earnings have been converging over time.

Keywords: This paper is the first to use administrative data to quantify the causes of the nonprofit pay gap. The 12% pay penalty is mostly causal; not due to selection. (search for similar items in EconPapers)
Date: 2026-05
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https://www2.census.gov/library/working-papers/2026/adrm/ces/CES-WP-26-33.pdf First version, 2026 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:26-33

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