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The fallacy of the Good Samaritan: Volunteering as a weird way of making money

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Author Info
Franz Hackl () (Department of Economics, Johannes Kepler University Linz, Austria)
Martin Halla () (Department of Economics, Johannes Kepler University Linz, Austria, Department of Economics, Johannes Kepler University Linz, Austria)
Gerald J Pruckner

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Abstract

This paper explores individual motives for volunteering: The analysis is based on the interpretation of volunteering as a consumption good (consumption model) or as a mean to increase individual’s own human capital (investment model). We present an econometric framework taking into account self selection into volunteering and simultaneity between the volunteering decision and the determination of income in order to test these two models and to identify the underlying motives. We find strong statistical evidence for the investment model with a highly robust and significant impact of volunteering on the wage rate. On average the wage premium as the difference in the wage rate between one person volunteering and not volunteering amounts up to 15.7 percent. Within the framework of the investment model it turns out that the number of volunteering hours plays a major role in explaining this wage premium. This supports the idea of volunteering as a mean to accumulate human capital and signalling willingness to perform. As far as the consumption model is concerned we find no convincing statistical evidence for its validity. The strong evidence for the investment model requires the consideration of voluntary activities in the estimation of wage equations. Moreover, we conclude that the existence of the wage premium is a decisive factor for people to volunteer or not and therefore reflects an important argument in the recruitment process of volunteers for several organisations.

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Paper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2004-15.

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Date of creation: Dec 2004
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Handle: RePEc:jku:econwp:2004_15

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Related research
Keywords: volunteering; voluntary labour supply; human capital accumulation; wage premium; altruism.;

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Find related papers by JEL classification:
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
D64 - Microeconomics - - Welfare Economics - - - Altruism

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References listed on IDEAS
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  15. Cugno, Franco & Ferrero, Mario, 2004. "Competition among volunteers," European Journal of Political Economy, Elsevier, vol. 20(3), pages 637-654, September. [Downloadable!] (restricted)
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    Other versions:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Max Albert, 2008. "Product Quality in a Simple OLG Model of Scientific Competition," MAGKS Papers on Economics 200804, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
  2. Bruna, Bruno & Damiano, Fiorillo, 2009. "Why without Pay? The Intrinsic Motivation between Investment and Consumption in Unpaid Labour Supply," CELPE Discussion Papers 111, CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy. [Downloadable!]
  3. Damiano Fiorillo, 2009. "Do monetary rewards crowd out intrinsic motivations of volunteers? Some empirical evidence for Italian volunteers," Discussion Papers 3_2009, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy. [Downloadable!]
  4. Benno Torgler & María A. García Valiñas & Alison Macintyre, 2008. "Environmental Participation and Environmental Motivation," Working Papers 2008.95, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  5. Fiorillo, Damiano, 2007. "Do monetary rewards undermine intrinsic motivations of volunteers? Some empirical evidence for Italian volunteers," MPRA Paper 7783, University Library of Munich, Germany. [Downloadable!]
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