Do professional year placements matter for job quality? The case of economics graduates

ABSTRACT

We study whether the completion of an optional professional year placement during undergraduate studies enhances job quality, in terms of earnings, job security and career fit, for economics graduates from a UK university. Using linear and discrete choice models, we estimate the effect of doing a professional year placement on four graduate outcomes that capture job quality and use a rich data set to control for demographics, educational background, academic achievement, degree, and graduate job characteristics. To account for possible self-selection bias, we use propensity score matching. We find a positive but weak effect of the professional year placement on earnings, but the salary gap becomes statistically insignificant once we control for self-selection. Similarly, we find no conclusive evidence supporting a positive effect of professional year placement on job security. However, we find a positive and robust effect of professional year placement on career fit: placement graduates are more likely to find jobs that fit their career plans than non-placement graduates, which holds even after controlling for self-selection. The empirical findings also show that job characteristics, like location and type of industry, and school background are additional factors contributing to graduates' employment quality. Finally, we find no differences in job quality due to gender.

KEYWORDS:

• Employability
• placement
• job quality
• salaries
• economics

Acknowledgments

We would like to thank João Santos Silva and Matthias Parey for their invaluable comments, as well as the participants at the Developments in Economics Education Conference 2021, Applied Microeconomics Seminar Series 2022, University of Surrey, NCI Research Day 2022, National College of Ireland, and the Employability Symposium 2023, Advance HE. Special thanks to the journal's editor and the anonymous referees who helped us to improve our paper. The authors remain responsible for any possible errors.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The maximum tuition fees increased from £3,250 to £9,000 in 2011 and further to £9,250 in 2012. Maintenance loans replaced maintenance grants from 2016/17 to cover living costs.

2 Jones, Greenb, and Higson (2017) find evidence of self-selection in the association between work placement and final-year academic performance.

3 A few studies considered self-selection when evaluating the impact of internships on labour market outcomes, but in contexts different to our study's. For example, Margaryan et al. (2022) examine compulsory internships in Germany, and Di Meglio et al. (2022) analyse short voluntary internships in Spain where there is no employment contract between the placement provider and the student.

4 The types of school are: academy, comprehensive, grammar, independent, sixth form and tertiary college. Sixth form colleges focus on older students (16–18 years old) preparing them for higher education, while tertiary colleges offer further (over 18 years old) education too. Academies, comprehensive and grammar schools are government-funded schools, while independent schools are private. Also, grammar schools require students to sit an exam before they are accepted. By controlling for school type we aim to capture differences in students' socioeconomic background.

5 The survey response rate at national level is around 50% (Higher Education Statistics Agency 2020). Because of the voluntary response characteristic of the survey, we consider the potential sample-selection bias (i.e. the surveyed sample is not randomly selected) by following Heckman's procedure (Heckman 1979), and we found no evidence of such bias in our data.

6 In our sample, most graduates who reported their earnings (approximately 79%) were full-time employees. We focus on this type of employment as this is more likely to be a permanent, career-oriented job, unlike part-time employment which is typically temporary.

7 The partial effect is the effect of the change in PTY from 0 to 1 on the predicted probability of the outcome.