Does it Pay for Women to Volunteer?

Abstract

This paper estimates the economic and non-economic returns to volunteering for prime-aged women. A woman's decision to engage in unpaid or paid work, and to marry and have children, is formulated as a discrete choice dynamic programming problem under uncertainty. Simulated maximum likelihood estimates of the model indicate that an extra year of volunteer experience increases wage offers in part-time work by 6.9% and wage offers in full-time work by 2.4%. Volunteering also increases the probability of receiving a full-time job offer by 22 percentage points compared to being non-employed. In addition to substantial economic and non-economic returns to volunteering, the estimated model also reveals an adverse selection mechanism. Highly educated low market-productivity women volunteer most often, which is consistent with the negative returns to volunteering found in OLS. The negative selection is driven by heterogeneous non-economic returns and differential marginal utilities of future consumption. The structural estimates also imply that future economic returns are relatively more important than contemporaneous non-economic returns (warm glow), and allowing volunteering-related childcare expenses to be tax-deductible would substantially increase volunteer labor supply and female lifetime earnings.