Paid and unpaid labor in nonprofit organizations: Does the substitution effect exist?

In non-profit organizations (NPOs), volunteers often work alongside paid workers. Such a co-production setting can lead to tension between the two worker groups. This article examines for the first time if and how volunteers influence the separation of paid employees, and thus it contributes to the debate over whether volunteers can substitute paid workers. Using Austrian data at the organizational level, we find a significant impact of volunteers on the separations of paid workers in NPOs facing increased competition. These findings support the assumption that a partial substitution effect exists between paid workers and volunteers.