Heterogeneity and self-selection into nonprofit management

This paper presents a microeconomic model of self-selection into nonprofit management. First, we extend previous models by assuming that individuals are heterogeneous in multiple dimensions besides intrinsic motivation, including managerial ability, self-image concerns, and laziness at work. Second, we consider the public sector as an alternative to nonprofit sector employment, and assume that nonprofit, for-profit, and public sectors differ in the perceived level of red tape, and the potential levels of fixed pay and variable pay. We show that self-selection into nonprofit management is a complex process that depends on multiple factors, and formulate conditions that need to be fulfilled in order to have self-selection of heterogeneous individuals into nonprofit management. From this finding we derive a number of important avenues for future research.