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Earning to Give: Occupational Choice for Effective Altruists

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  • Jonathan Morduch
  • Ariane Szafarz

Abstract

Effective altruists wish to do good while optimizing the social performance they deliver. We apply this principle to the labor market. We determine the optimal occupational choice of a socially motivated worker who has two mutually exclusive options: a job with a for-profit firm and a lower-paid job with a nonprofit. We construct a model in which a worker motivated only by pure altruism will work at a relatively high wage for the for-profit firm and then make charitable contributions to the nonprofit; this represents the “earning to give” option. By contrast, the occupational choice of a worker sensitive to warm glow (“impure altruism”) depends on her income level. While the presence of “warm glow” feelings would seem to clearly benefit charitable organizations, we show that impure altruism can create distortions in labor market choices. In some cases, warm glow feelings may push the worker to take a job with the nonprofit,even when it is not optimal for the nonprofit.

Suggested Citation

  • Jonathan Morduch & Ariane Szafarz, 2018. "Earning to Give: Occupational Choice for Effective Altruists," Working Papers CEB 18-017, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/269404
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    References listed on IDEAS

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    More about this item

    Keywords

    altruism; occupation choice; nonprofit; warm glow; social performance; donation;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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