Where is the Warm Glow? Donated Labour and Nonprofit Wage Differentials in the Health and Social Work Industries

The “Warm Glow” theory of worker motivation in nonprofit organisations predicts that wages will be lower in the voluntary sector than for equivalent workers in the private and public sectors. Empirical findings, however, are mixed. Focussing on the Health & Social Work industries, we examine differences in levels of unpaid overtime between the sectors to test for the existence of a warm-glow effect. Although levels of unpaid overtime are significantly higher in voluntary sector, we find that this is insufficient to explain the wage premiums earned in this sector.