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We investigate the drivers of the for-profit/not-for-profit wage differential by comparing judgments of job characteristics of workers who voluntarily or involuntarily moved from the former to the latter sector. We define voluntary movers as those who applied for a job in a not-for-profit organization and, when successful, resigned from a for-profit position, while involuntary movers have either been laid off by their company or resigned without already having a job offer in the not-for-profit sector. We observe that a large share of voluntary movers do not end up with higher wages but, surprisingly, do have higher job satisfaction after the change. The vast majority of voluntary movers find significantly higher time flexibility, improved relationships with stakeholders and closer conformity to educational skills in their new jobs. Our findings support the for-profit/not-for-profit compensating differential hypothesis and shed light on mechanisms that are beyond the job donation behavior of intrinsically motivated workers.

Working in the for-profit versus not-for-profit sector: what difference does it make? An inquiry on preferences of voluntary and involuntary movers