Ben Dahmen (London School of Economics and Political Science)
Omry Yoresh
How unequal is access to internships, and what explains the inequality? Using Dutch administrative data, we show that the richest university students are 50% (7.5 percentage points) more likely to complete an internship than their poorest peers. This inequality matters, as the literature has found long-term wage returns to doing an internship between five and ten percent, and we show that internships contribute to 5% of the intergenerational income inequality. In our paper, we investigate the factors that explain differences in which students choose to pursue internships. High school exam scores dont explain any of the inequality between rich and poor; however, selection into university programs accounts for 23% of this inequality. We then study the importance of family connections using a causal design that compares siblings and find that these connections explain at least 9% of the inequality. Lastly, we provide evidence that the opportunity costs of doing an internship may also be important.