Volunteering and Income – The Fallacy of the Good Samaritan?

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. 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 significance of skill acquisition to accumulate human capital, the importance of deepening of social contacts and signalling willingness to perform. As far as the consumption model is concerned we find no clear statistical evidence for its validity.