On the Up: Voluntary Sector Wages in the UK 1998 - 2007

Abstract

Since 1997 the UK Government has sought to expand the provision of public services by the independent nonprofit sector. With policies to build the capacity of the sector, public spending on voluntary organisations has grown from £2 billion in 1996/97 to £6.88 billion in 2005/06. Theory suggests that the comparative advantage of nonprofits lies in the mission-motivation of those who work in them, and predicts that motivated workers will accept lower wages. We examine sector wage differentials in time-series to show that growth in voluntary sector wages has outpaced the private and public sectors. This state intervention in the market has had big consequences for the make-up of the voluntary sector workforce.