THE OPTIMAL MIX OF VOLUNTEER AND PAID STAFF IN LOCAL GOVERNMENTS - AN APPLICATION TO MUNICIPAL FIRE DEPARTMENTS

Despite the fact that the majority of local governments in the United States use volunteers to supplement paid staff, little research has been conducted on the cost of volunteers or demand for their services by public agencies. This article develops a general methodology for identifying the optimal (cost minimizing) mix of volunteer and paid staff and illustrates its use for fire protection. The cost model that is developed also allows estimation of the elasticities of factor demand for volunteers and the elasticity of substitution between volunteer and paid staff. Contrary to the common assumption of perfectly elastic demand for volunteers, the results indicate inelastic demand for volunteer fire fighters and imperfect substitution between paid and volunteer staff. In addition, the findings indicate if annual volunteer administration costs (for recruitment, training, and supervision) exceed $600 per volunteer, the fire department should consider adding paid personnel.