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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.
Urban pollution
(2022)
We use worldwide satellite data to analyse how population size and density affect urban pollution. We find that density significantly increases pollution exposure. Looking only at urban areas, we find that population size affects exposure more than density. Moreover, the effect is driven mostly by population commuting to core cities rather than the core city population itself. We analyse heterogeneity by geography and income levels. By and large, the influence of population on pollution is greatest in Asia and middle-income countries. A counterfactual simulation shows that PM2.5 exposure would fall by up to 36% and NO2 exposure up to 53% if within countries population size were equalized across all cities.
Predicting entrepreneurial development based on individual and business-related characteristics is a key objective of entrepreneurship research. In this context, we investigate whether the motives of becoming an entrepreneur influence the subsequent entrepreneurial development. In our analysis, we examine a broad range of business outcomes including survival and income, as well as job creation, expansion and innovation activities for up to 40 months after business formation. Using self-determination theory as conceptual background, we aggregate the start-up motives into a continuous motivational index. We show – based on a unique dataset of German start-ups from unemployment and non-unemployment – that the later business performance is better, the higher they score on this index. Effects are particularly strong for growth oriented outcomes like innovation and expansion activities. In a next step, we examine three underlying motivational categories that we term opportunity, career ambition, and necessity. We show that individuals driven by opportunity motives perform better in terms of innovation and business expansion activities, while career ambition is positively associated with survival, income, and the probability of hiring employees. All effects are robust to the inclusion of a large battery of covariates that are proven to be important determinants of entrepreneurial performance.
On Track to Success?
(2022)
Many countries consider expanding vocational curricula in secondary education to boost skills and labour market outcomes among non-university-bound students. However, critics fear this could divert other students from more profitable academic education. We study labour market returns to vocational education in England, where until recently students chose between a vocational track, an academic track and quitting education at age 16. Identification is challenging because self-selection is strong and because students’ next-best alternatives are unknown. Against this back- drop, we leverage multiple instrumental variables to estimate margin-specific treatment effects, i.e., causal returns to vocational education for students at the margin with academic education and, separately, for students at the margin with quitting education. Identification comes from variation in distance to the nearest vocational provider conditional on distance to the nearest academic provider (and vice-versa), while controlling for granular student, school and neighbourhood characteristics. The analysis is based on population-wide administrative education data linked to tax records. We find that the vast majority of marginal vocational students are indifferent be- tween vocational and academic education. For them, vocational enrolment substantially decreases earnings at age 30. This earnings penalty grows with age and is due to wages, not employment. However, consistent with comparative advantage, the penalty is smaller for students with higher revealed preferences for the vocational track. For the few students at the margin with no further education, we find merely tentative evidence of increased employment and earnings from vocational enrolment.