Standing out from the Crowd: How College Degrees, Internships, and Academic Performance Influence Hiring Decisions

The economy’s slow recovery after the 2008 crisis has meant that recent college graduates are entering a fragile labor market where they must compete with more experienced job seekers. For this reason, internships are often considered an advantageous signaling mechanism in the labor market. On the other hand, there are those who consider internships the least effective way to launch a career because they are often unpaid, excluding low-income students who cannot afford to work for free; in addition, internships involve menial tasks and do not guarantee a transition to a paying job.

A new study by John M. Nunley, Adam Pugh, Nicholas Romero, and R. Alan Seals Jr. uses experimental data to randomly generate resumes to determine whether college degrees and internship experience have an impact on the ability of recent college graduates to find jobs. The authors find a positive and statistically significant effect of internship experience on job opportunities. However, within the experimental design, the findings do not show statistical evidence that business degrees lead to better job opportunities.

During January and July 2013, the authors submitted 9,400 randomly generated resumes from fictional applications for entry-level jobs in the fields of insurance, banking, management, and marketing and sales. The job openings were located in Atlanta, Baltimore, Boston, Dallas, Los Angeles, Minneapolis, and Portland. For each fictional applicant’s resume, the researchers randomly assigned one of the following majors: Accounting, Biology, Economics, English, Finance, History, Management, Marketing, or Psychology.

To determine the impact of internship experience, 25 percent of the fictional applicants were randomly assigned a three-month internship matching the field of the job application, taking place in the summer before the completion of applicants’ Bachelors degrees. Also randomly assigned were eight possible names (four female and four male), addresses, one of four universities where they completed their degrees, and whether or not they report a 3.9 GPA. In the former case, if the resume included a GPA, the only possible assigned GPA was 3.9. In order to avoid employer bias to hiring an applicant who graduated from a particular university, the researchers randomly assigned four possible public, non-flagship universities in each employer’s state. By designating non-flagship universities only, meaning not the most well known schools in each state, the researchers avoided an association of bias that may have come with a well known school.

All of the fictional applicants graduated in May 2010, and all the applicants registered work experience after graduating. Keeping these characteristics constant across the pool of fictional applicants allowed the researchers to determine the impact of internships and college degrees on employment opportunities. However, one limitation of the approach is that the measure of employment opportunity is whether the applicant received a request for an interview—so the complete interview process is unobserved, making it impossible to establish what specific set of skills the employers value most.

The authors do not find evidence that prospective employers—in the business-related categories for which the fictional candidates applied—prefer to interview applicants with business degrees over applicants with non-business degrees. From this result, the researchers conclude that the probability of securing a job opportunity is not associated with particular business degrees.

On the other end, the interview rate for both business degree and non-business degree majors with internship experience was 14 percent higher than for those applicants with no internship experience. The results also show that there is no difference between the interview rates of the four universities randomly assigned to the fictional applicants. With respect to gender, the results do not show a statistically significant difference between the interview rates of females and males in the fictional pool of resumes.

The inclusion of GPA in a portion of the fictional resumes is a proxy for academic ability. The results show that, for applicants who reported GPA and internship experience, the interview rate is 28 percent higher than those who did not include the GPA but reported the internship. Most importantly, this higher interview rate for applicants with a reported 3.9 GPA is statistically significant from the group that did not include the GPA.

The study suggests a significant and positive relationship between internships and job opportunities. Even amid the limited reach of the experimental resume design, the results shed light on the way in which internships help recent graduates transition to the labor market. Internships are a highly beneficial tool for providing real-world work experience. However, it is important to make certain that internships amount to more than a cheap form of labor for businesses.

The real challenge for universities, firms, and government is to coordinate and promote internship programs that improve matching between job seekers and employees, but that also have regulations that incentivize employers to provide acceptable working conditions for their interns.

Article Source: Nunley, John M., Adam Pugh, Nicholas Romero, and R. Alan Seals Jr. “College Major, Internship Experience, and Employment Opportunities: Estimates from a Résumé Audit,” Labour Economics, 38 (2016): 37-46.

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