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

  • Vlassopoulos, Michael

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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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. Rowat, Colin & Seabright, Paul, 2006. "Intermediation by aid agencies," Journal of Development Economics, Elsevier, vol. 79(2), pages 469-491, April.
  2. Tim Besley & Maitreesh Ghatak, 2005. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics 928, London School of Economics and Political Science, LSE Library.
  3. Jonathan Levin, 2000. "Relational Incentive Contracts," Working Papers 01002, Stanford University, Department of Economics.
  4. 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.
  5. Josse Delfgaauw & Robert A.J. Dur, 2002. "Signaling and Screening of Workers' Motivation," Tinbergen Institute Discussion Papers 02-050/3, Tinbergen Institute, revised 04 Mar 2005.
  6. 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.
  7. 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.
  8. Day, K.M. & Devlin, R.A., 1993. "The Payoff to Work without Pay: Volunteer Work as an Investment in Human Capital," Working Papers 9310e, University of Ottawa, Department of Economics.
  9. 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.
  10. 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.
  11. 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.
  12. Francois, Patrick, 2000. "'Public service motivation' as an argument for government provision," Journal of Public Economics, Elsevier, vol. 78(3), pages 275-299, November.
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