Does it Pay for Women to Volunteer?
Robert M. Sauer
University of London - Royal Holloway College
August 1, 2012
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, J64working papers series
Date posted: August 3, 2012
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