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Do internships pay off?
(2022)
We study 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 percent in both ordinary least squares (OLS) and instrumental variables (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.
Inequality of opportunity, particularly when overlaid with socioeconomic, ethnic, or cultural differences, may limit the scope of cooperation between individuals. A central question, then, is how to overcome such obstacles to cooperation. We study this question in the context of Germany, by asking whether the propensity of immigrant youth to cooperate with native peers was affected by a major integration reform: the introduction of birthright citizenship. Our unique setup exploits data from a large-scale lab-in-the-field experiment in a quasi-experimental evaluation framework. We find that the policy caused male, but not female, immigrants to significantly increase their cooperativeness toward natives. We show that the increase in out-group cooperation among immigrant boys is an outcome of more trust rather than a reflection of stronger other- regarding preferences towards natives. In exploring factors that may explain these behavioral effects, we present evidence that the policy also led to a near-closure of the educational achievement gap between young immigrant men and their native peers. Our results highlight that, through integration interventions, governments can modify prosocial behavior in a way that generates higher levels of efficiency in the interaction between social groups.