Thanks for nothing? Not-for-profits and motivated agents

We re-examine the labor donation theory of not-for-profits and show that these organizations may exist notnecessarily because motivated workers prefer to work in them, or that they dominate for-profits in terms ofwelfare, but because the excess supply of motivated workers makes the non-profit form more attractive tomanagers. We show that if firms had to compete for motivated workers then not-for-profit firms would becompeted out by for-profit firms. Therefore, in the choice between not-for-profit and for-profit provision, otherthan incentive problems, the distribution of rents between management and workers, and consequently, therelative scarcity of motivated workers may play an important role.[...]