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

Franz Hackl (), Martin Halla and Gerald Pruckner

No 2004-15, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

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.

Keywords: volunteering; voluntary labour supply; human capital accumulation; wage premium; altruism. (search for similar items in EconPapers)
JEL-codes: D64 J22 J24 J31 (search for similar items in EconPapers)
Date: 2004-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Kyklos, Vol 60(1)/2007, pp. 77-104

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http://www.econ.jku.at/papers/2004/wp0415.pdf (application/pdf)

Related works:
Journal Article: Volunteering and Income – The Fallacy of the Good Samaritan? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2004_15

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