Working in the Profit Versus Not-For-Profit Sector: What Difference Does it Make? An Inquiry on Preferences of Voluntary and Involuntary Movers

Abstract

We investigate what is behind the profit/not–for-profit wage differential by comparing judgments on job characteristics of workers who voluntarily or involuntarily moved from the former to the latter. We define voluntary movers as those who applied for a job in a not-for-profit organization and, when successful, resigned from their for profit position, while involuntary movers can either have been laid off by the company or have resigned without already having a job offer in the not-for-profit sector when leaving the firm. We observe that almost half of voluntary movers end up without higher wages, but with higher job satisfaction after the change. A vast majority of them exhibit significantly higher time flexibility, improved relationships with stakeholders, closer consistency with educational skills and higher satisfaction of intrinsic motivations in the new job. Our findings support the profit/no profit compensating differential hypothesis and shed light on mechanisms which are beyond the donative behaviour of intrinsically motivated workers.