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IZA Discussion Paper No. 7697
October 2013
Does It Pay to Work for Free? Wage Returns and Gender Differences in the Market for Volunteers

published in: Oxford Bulletin of Economics and Statistics, 2017, 79(6), 1018-1045

Working as a volunteer is a widespread phenomenon that has both individual and societal benefits. In this paper, we identify the wage returns to working for free by exploiting exogenous variation in rainfall across local area districts in England, Scotland and Wales. Instrumental variables estimates reveal large returns for both men and women. However, the returns are differentially greater for men and account for a substantial proportion of the gender earnings gap. A comparison of OLS and IV estimates also indicates negative selection into volunteering for both genders. In a model of optimal volunteering, negative selection implies that a reduction in the cost of volunteering will lead to an expanded and higher-skilled pool of volunteers, and greater societal benefits. A policy that has the effect of reducing the cost relatively more for women may also narrow the gender earnings gap.

Communications
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
Network Coordination
Christina Gathmann
christina.gathmann@liser.lu

The IZA@LISER Network is a global community of scholars dedicated to excellence in labor economics and related fields, now coordinated at the Luxembourg Institute of Socio-Economic Research (LISER) following its transition from Bonn.

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