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Does government spending crowd out voluntary labor and donations?

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  • Julia Bredtmann

    (RWI, and IZA, Germany)

Abstract

Private charitable contributions play an essential role in most economies. Despite the existence of welfare states, people contribute money and supply volunteer labor to charity. From a policy perspective, there is concern that comprehensive government spending might crowd out these private charitable donations. If perfect crowding out occurs, then every dollar spent by the government will lead to a one-for-one decrease in private spending, leaving the total level of welfare unaltered. Understanding the magnitude and causes of crowding out is crucial, as it represents a hidden cost to public spending and can thus have significant impacts on public welfare.

Suggested Citation

  • Julia Bredtmann, 2016. "Does government spending crowd out voluntary labor and donations?," IZA World of Labor, Institute of Labor Economics (IZA), pages 299-299, September.
    • Handle: RePEc:iza:izawol:journl:y:2016:n:299
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    References listed on IDEAS

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    1. Amihai Glazer & Kai A. Konrad, 2008. "A Signaling Explanation for Charity," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 713-722, Springer.
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    Cited by:

    1. Annalisa Tassi, 2024. "Do community needs affect the decision to volunteer? The case of refugees in Germany," Working Papers 238, Bavarian Graduate Program in Economics (BGPE).
    2. Andrea Vega-Tinoco & Ana Isabel Gil-Lacruz & Marta Gil-Lacruz, 2022. "Civic Participation as a Promoter of Well-Being: Comparative Analysis among European Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(1), pages 217-237, November.

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    More about this item

    Keywords

    private philanthropy; time and money donations; government spending; crowding out;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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