1 In Search of the “Warm Glow”: Estimating Pay and Job Satisfaction in the Private, Public and Voluntary Sectors1

Mixed findings in studies of wage differences between private, public and voluntary sectors provide confusing evidence about the existence of a “warm glow ” wage difference in nonprofit organisations. We use attitudinal data from an employer-employee linked dataset to examine differences between the private, public and voluntary sectors. We find a voluntary sector premium in job satisfaction in line with previous studies. However, the higher level of job satisfaction found amongst workers in the voluntary sector disappears after we control for relative wages. In the Health and Social Work industries, including relative wages in the satisfaction equations leads to estimates of higher job satisfaction in the private sector. This suggests that the difference in relative wages between the sectors is at least in part responsible for observed sector differences in job satisfaction. These findings are difficult to reconcile with a traditional theory of ‘warm glow ’ motivation for workers in the voluntary sector. Are the employees of voluntary, or nonprofit, organisations motivated by a ‘warm glow’? One of the areas in which voluntary organisations may differ from private an