The effects of monetary compensation on paid volunteers: Quasi-experimental evidence from Germany

Lieke Voorintholt () and Annalisa Tassi ()
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Lieke Voorintholt: Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier University
Annalisa Tassi: Research Institute for the Evaluation of Public Policies of the Bruno Kessler Foundation (FBK-IRVAPP)

No 202605, IAAEU Discussion Papers from Institute of Labour Law and Industrial Relations in the European Union (IAAEU)

Abstract: In recent decades, volunteering has expanded from completely unpaid work to the possibility of receiving a small (tax-free) monetary compensation for the activity performed, with the goal of stimulating these activities. Since the relationship between monetary compensation and prosocial behavior may differ from standard labor market settings, the effectiveness of monetary and tax incentives in this context is an empirical question. Using data from German income tax returns, this paper investigates the effects of changes in monetary compensations on the duration of voluntary work, donations, and market labor income of paid volunteers. Our empirical analysis leverages a German policy change from 2013 that increased the tax-free threshold for volunteer compensations. Following a difference-in-differences approach in combination with a duration model, we do not find evidence that affected volunteers change the number of years they spend in a certain volunteer position. Our results also show that the compensation increase has no spillover effects on labor earnings or donations. Combining our null findings and insights from our theoretical model, we suggest exploring non-incentive-based measures rather than higher compensations to stimulate paid volunteering.

Keywords: Paid volunteering; volunteer duration; tax-free compensation; policy change; labor supply; donations (search for similar items in EconPapers)
JEL-codes: D11 D12 D64 H24 J22 J38 (search for similar items in EconPapers)
Pages: 80 pages
Date: 2026-06
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