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Volunteer hiring, organizational form and the provision of mission-oriented goods

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  • Vlassopoulos, Michael

Abstract

Mission-oriented organizations, such as nonprofit organizations and NGOs, rely critically on volunteer recruitment to achieve their organizational goals. Besides serving as an outlet of altruistic motives, volunteering often acts as a stepping-stone for a paid position in the nonprofit sector. This paper provides an explanation for the fact that nonprofit employers are uniquely able to attract such volunteers with social concerns and career aspirations and for the related observation that nonprofits figure prominently in mission-related activities. Our theory is predicated on that - by committing to not distributing profits - nonprofit incorporation relaxes the incentive constraint that employers face when implicitly contracting with volunteers, without relying on ex ante differences in workers' preferences over the employer's identity or inherent asymmetries between nonprofit and for-profit providers. The not-for-profit commitment is shown to be effective only in activities where producers, who can choose to be for-profit or nonprofit, care about the level or quality of the service being provided. Thus, in the equilibrium of the model developed here nonprofit entry in sectors where missions play a defining role and the hiring of volunteers arise endogenously due to economic forces. This equilibrium outcome has some desirable welfare properties. Keywords; volunteers, nonprofit institutions, privately provided public goods

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Bibliographic Info

Paper provided by Economics Division, School of Social Sciences, University of Southampton in its series Discussion Paper Series In Economics And Econometrics with number 0707.

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Date of creation: 01 Sep 2007
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Handle: RePEc:stn:sotoec:0707

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  1. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
  2. Patrick Francois, 2001. "Employee Care and the Role of Nonprofit Organizations," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(3), pages 443-, September.
  3. Jonathan Levin, 2000. "Relational Incentive Contracts," Working Papers 01002, Stanford University, Department of Economics.
  4. Josse Delfgaauw & Robert Dur, 2003. "Signaling and Screening of Workers' motivation," CESifo Working Paper Series 1099, CESifo Group Munich.
  5. Francois, Patrick, 2000. "'Public service motivation' as an argument for government provision," Journal of Public Economics, Elsevier, vol. 78(3), pages 275-299, November.
  6. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
  7. Kathleen Day & Rose Annue Devlin, 1998. "The Payoff to Work without Pay: Volunteer Work as an Investment in Human Capital," Canadian Journal of Economics, Canadian Economics Association, vol. 31(5), pages 1179-1191, November.
  8. Colin Rowat and Paul Seabright, 2005. "Intermediation by aid agencies," Discussion Papers 05-16, Department of Economics, University of Birmingham.
  9. Patrick Francois, 2002. "Not-for-profit Provision of Public Services," The Centre for Market and Public Organisation 02/060, Department of Economics, University of Bristol, UK.
  10. Carmichael, H Lorne, 1989. "Self-Enforcing Contracts, Shirking, and Life Cycle Incentives," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 65-83, Fall.
  11. Roth, Alvin E, 1984. "The Evolution of the Labor Market for Medical Interns and Residents: A Case Study in Game Theory," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 991-1016, December.
  12. Kevin Murdock, 2002. "Intrinsic Motivation and Optimal Incentive Contracts," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 650-671, Winter.
  13. Leete, Laura, 2001. "Whither the Nonprofit Wage Differential? Estimates from the 1990 Census," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 136-70, January.
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Cited by:
  1. Buurman, Margaretha & Dur, Robert, 2008. "Incentives and the Sorting of Altruistic Agents into Street-Level Bureaucracies," IZA Discussion Papers 3847, Institute for the Study of Labor (IZA).
  2. Margaretha Buurman & Robert Dur, 2008. "Incentives and the Sorting of Altruistic Agents into Street-Level Bureaucracies," Tinbergen Institute Discussion Papers 08-113/1, Tinbergen Institute, revised 14 Oct 2010.

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