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 work, and to marry and have children, is formulated as a forward-looking discrete choice dynamic programming problem. Simulated maximum likelihood estimates of the model indicate that an extra year of volunteer experience increases wage offers in part-time work by 8.3% and wage offers in full-time work by 2.4%. The behavioral model also reveals an adverse selection mechanism which is consistent with the negative returns to volunteering found in reduced-form wage regressions. The negative selection is driven by differential unobserved market-productivity and heterogeneous marginal utilities of future consumption. The structural estimates also imply that the economic returns to volunteering are relatively more important than non-economic returns, and introduction of a tax-credit for volunteering-related childcare expenses would substantially increase volunteer labor supply and female lifetime earnings.

Number of Pages in PDF File: 46

Keywords: Female Labor Supply, Marriage, Fertility, Negative Selection, Dynamic Programming, Structural Estimation, Simulated Maximum Likelihood, Attrition, Volunteering

JEL Classification: C35, C53, C61, D91, J12, J13, J22, J24, J31, J64

working papers series