Training and intrinsic motivation in nonprofit and for-profit organizations

Abstract

We develop a theoretical model in which for-profit and nonprofit employers compete to hire a worker who derives intrinsic motivation from the nonprofit's social mission. Using a unique data set of California establishments, we document a new empirical result that training has a higher incidence in nonprofits than in for-profits. In nonprofits, we also find evidence of lower base wages (with the wage gap increasing in skill level) and less incentive pay. We use the model to interpret the new result concerning training and the results (both here and from the prior literature) on base wages and incentive pay.