The Effect of Pre-University Work Experience on Graduate Wages

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Abstract:

Over the last decade, the number of university students undertaking work experience to improve their labour market outcomes has risen rapidly. Students are partaking in more internships, vacation placements or short taster days. Yet the casual wage return remains uncertain. Therefore, my paper aims to investigate the relationship between undergraduate work experience and graduate wages in the UK. I employ panel data from the Understanding Society survey database from the period 2009 to 2020. For my main analysis, I conduct an OLS regression with fixed effects and find work experience increases wages by approximately 12.9%. This result is statistically significant at the 5% level and suggests work experience tends to an initial salary boost in the labour market. The empirical findings from a probit regression also show graduates with work experience increase their chances of employment by 37.7% one year after graduation. Both findings are in line with the main literature. However, there is evidence to suggest both effects diminish over time. Finally, I cannot conclude any significant heterogeneous effects of students’ ethnicity despite the governmental efforts to increase work experience participation rates for ethnic minorities.

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