Thanks for Nothing? Not-for-Profits and Motivated Agents

Maitreesh Ghatak and Hannes Mueller

No 7663, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We re-examine the labor donation theory of not-for-profits and show that these organizations may exist not necessarily because motivated workers prefer to work in them, or that they dominate for-profits in terms of welfare, but because the excess supply of motivated workers makes the non-profit form more attractive to managers. We show that if firms had to compete for motivated workers then not-for-profit firms would be competed out by for-profit firms. Therefore, the choice between not-for-profit and for-profit provision is not always a question of resolving incentive problems but also one of distribution of rents between management and workers, and consequently, the relative scarcity of workers plays an important role in this choice.

Keywords: Not-for-profits; Intrinsic motivation; Labor donation; Free riding (search for similar items in EconPapers)
JEL-codes: J32 J42 L31 L33 (search for similar items in EconPapers)
Date: 2010-01
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Related works:
Journal Article: Thanks for nothing? Not-for-profits and motivated agents (2011)
Journal Article: Thanks for nothing? Not-for-profits and motivated agents (2011)
Working Paper: Thanks for Nothing? Not-for-Profits and Motivated Agents (2009)
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