An economic interpretation of institutional volunteering

Traditional economic theory predicts that individuals will not supply goods and services without being compensated. And yet, large numbers of individuals volunteer their work to a host of institutions. The majority of such volunteering is done through groups and associations devoted to particular causes. In this paper we offer an explanation of such volunteering, which is based on traditional economic theory. We argue that individuals with a propensity to volunteer are viewed as desirable in certain exchange relationships. Using the labor market as a backdrop, the paper combines the idea of screening with recent developments in organizational theory to explain why a large proportion of the population might rationally volunteer through institutions.