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Do Internships Pay Off? The Effects of Student Internships on Earnings

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  • Margaryan, Shushanik

    (University of Potsdam)

  • Saniter, Nils

    (Federal Ministry for Economic Affairs and Energy (BMWi))

  • Schumann, Mathias

    (University of Hamburg)

  • Siedler, Thomas

    (University of Potsdam)

Abstract

This paper studies the causal effect of student internship experience in firms on earnings later in life. We use mandatory firm internships at German universities as an instrument for doing a firm internship while attending university. Employing longitudinal data from graduate surveys, we find positive and significant earnings returns of about 6% in both OLS and IV regressions. The positive returns are particularly pronounced for individuals and areas of study that are characterized by a weak labor market orientation. The empirical findings show that graduates who completed a firm internship face a lower risk of unemployment during the first year of their careers, suggesting a smoother transition to the labor market.

Suggested Citation

  • Margaryan, Shushanik & Saniter, Nils & Schumann, Mathias & Siedler, Thomas, 2019. "Do Internships Pay Off? The Effects of Student Internships on Earnings," IZA Discussion Papers 12478, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12478
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    Cited by:

    1. Thanos Mergoupis & Robertas Zubrickas, 2024. "Work experience, information revelation, and study effort," Oxford Economic Papers, Oxford University Press, vol. 76(2), pages 495-513.
    2. Isaac Kofi Mensah & Muhammad Khalil Khan & Deborah Simon Mwakapesa, 2023. "Factors determining the entrepreneurial intentions among Chinese university students: the moderating impact of student internship motivation," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-15, December.
    3. Thomas Bolli & Katherine Caves & Maria Esther Oswald-Egg, 2021. "Valuable Experience: How University Internships Affect Graduates’ Income," Research in Higher Education, Springer;Association for Institutional Research, vol. 62(8), pages 1198-1247, December.
    4. Maria Esther Oswald-Egg & Ursula Renold, 2019. "No Experience, No Employment: The Effect of Vocational Education and Training Work Experience on Labour Market Outcomes after Higher Education," KOF Working papers 19-469, KOF Swiss Economic Institute, ETH Zurich.
    5. Neyt, Brecht & Verhaest, Dieter & Baert, Stijn, 2019. "The Impact of Internship Experience During Secondary Education on Schooling and Labour Market Outcomes," GLO Discussion Paper Series 425, Global Labor Organization (GLO).
    6. Jaeger, David A. & Nunley, John M. & Seals, R. Alan & Shandra, Carrie L. & Wilbrandt, Eric J., 2023. "The demand for interns," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 372-390.
    7. Oswald-Egg, Maria Esther & Renold, Ursula, 2021. "No experience, no employment: The effect of vocational education and training work experience on labour market outcomes after higher education," Economics of Education Review, Elsevier, vol. 80(C).
    8. Panagiotis Arsenis & Miguel Flores, 2022. "Do professional year placements matter for job quality? The case of economics graduates," School of Economics Discussion Papers 0922, School of Economics, University of Surrey.
    9. Antoni, Manfred & Gerner, Hans-Dieter & Jäckle, Robert & Schwarz, Stefan, 2024. "When Women Learn That They Earn Less: The Gender Pay Gap in University Student Internships," MPRA Paper 122018, University Library of Munich, Germany.
    10. Elena-Loreni Baciu, 2022. "Employment Outcomes of Higher Education Graduates from during and after the 2007–2008 Financial Crisis: Evidence from a Romanian University," Sustainability, MDPI, vol. 14(18), pages 1-30, September.
    11. Ilse Tobback & Dieter Verhaest & Stijn Baert, 2024. "Internships, Hiring Outcomes and Underlying Mechanisms: A Stated Preferences Experiment," De Economist, Springer, vol. 172(1), pages 25-48, March.

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    More about this item

    Keywords

    labor market returns; higher education; skill development; internships; instrumental variable;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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