According to the labor donation theory, workers adhering to the firms' mission 

are willing to donate a portion of their paid labor. In this paper, we study how

workers' fairness concerns limit the firm's ability to extract labor donation from its

employees. We find that, in sectors where the firm's mission is important, optimal

contracts are such that high-ability employees perceive their wage as less fair than

low-ability employees and they must be rewarded with an “envy rent”. The oppo-

site is true in sectors where the firm's mission does not play a relevant role: here the

envious employees have low-ability. We empirically test the predictions of the model

using the German Socio-Economic Panel finding support for our theoretical results.