Is an internship worth more than majoring in business?

Yes, it seems that may be so.  There is a new paper (pdf) by John M. Nunley, Adam Pugh, Nicholas Romero, and R. Alan Seals, the abstract is this:

We use experimental data from a resume-audit study to estimate the impact of particular college majors and internship experience on employment prospects. Our experimental design relies on the randomization of resume characteristics to identify the causal e ffects of these attributes on job opportunities. Despite applying exclusively to business-related job openings, we nd no evidence that business degrees improve employment prospects. Furthermore, we find no evidence linking particular degrees to interview-request rates. By contrast, internship experience increases the interview-request rate by about 14 percent. In addition, the “returns” to internship experience are larger for non-business majors than for business majors.

Their underemployment paper (pdf) is also interesting:

We conduct a resume audit to estimate the impact of unemployment and underemployment on the employment prospects facing recent college graduates. We find no evidence that employers use current or past unemployment spells, regardless of their length, to inform hiring decisions. By contrast, college graduates who became underemployed after graduation receive about 15-30 percent fewer interview requests than job seekers who became “adequately” employed after graduation. Internship experience obtained while completing one’s degree reduces the negative e ffects of underemployment substantially.

No wonder the market-clearing rate for internship is so…low.


It's over forty years ago, but I remember the senior partner of an accounting partnership telling me that he'd always hire a bright graduate in any-old-thing than a commonplace graduate in accounting or commerce. Heavens, he'd rather hire a bright schoolboy than the latter. Night classes could repair the lack of knowledge but not the lack of spark.

They might want to, but the accounting cartel now requires a master's degree in accounting in addition to the other requirements to become a CPA.

It's different today, and I think for the worse. Most employers, I believe to their detriment, want the exact pedigree they have.

Completely different world back then of course. You can't become an accountant today without actually getting an accounting degree.

Gosh: adding up, and dodging taxes, now requires a master's degree? We're doomed, I tell ye, doomed.

For what it's worth, in my state of residence the educational requirements are a bachelor's degree, 24 hours of specific accounting courses, and 150 total credit hours. The degree could be in anything.

I have a blindingly novel insight: It's not what you know, it's who you know.

You don't have to cite me when you repeat that.

Agree. I doubt if the internship market is subject to the same constraints with regard to discrimination, etc. so it's easier for personal ties (mostly your parents' personal ties) to land you an internship. Once you're inside, your long term prospects depend on your skills, but you have to get inside.

The first study shows that an internship will get you a slightly better chance at an interview, but a business degree won't. Seems a lot harder to test whether the business degree helps the interviewee land a job.

No wonder the market-clearing rate for internship is so…low.

Only in some fields.

And I bet for some, something like this is considerably more lucrative than earning a mere PhD -

'The Young Scholars Research Assistantship is a new program open to 1st and 2nd year graduate students in PhD programs. It presents an extraordinary opportunity to do research with a scholar during the summer in the humanities or social science field of your choice. Participants have the option of working with a professor in their vicinity or remotely with faculty outside their region.'

And this likely sparkles on an application to somewhere like FSU, thus providing yet another opportunity to turn around and apply for another IHS program -

'The Mercatus Center’s MA Fellowship Program is a competitive fellowship program for students in George Mason University’s MA economics program who are interested in pursuing an advanced degree in applied economics in preparation for a career in public policy. Our MA fellows take specialized courses which provide analytic training in applying economic ideas to solve problems in the world.'

It isn't as if there is only one way to boost your career prospects.

I think the question is too broad. I have clients who own family businesses. These are not Mom & Pop shops, but solid mid-sized companies. The children and grand children went off to college, but all of their useful knowledge came for running the business came from working in the business. Their internships began as school boys and lasted into adulthood.

On the other hand, If your dream is to be a monkey in a pen at a financial firm, credentials will count for a lot. The firm's partners like having credentialed monkeys in those pens. On the other other hand, if you want to work for the government in BLS, for example, an internship is going to count for a lot more than your economics degree.

College is pure signalling. College professors are overpaid for producing next to nothing of real value.

With apologies to Bryan Caplan, the case for college being a pure signal is very hard to make. Partly signalling? Of course. Mostly signalling? Maybe. Pure signalling? Not a chance.

Even if it were a pure signal, that wouldn't mean it has no value. Signals can be incredibly valuable, both to individuals and to society.

And they can work for and against you, depending upon the receiver. A nice selection of Aryan Brotherhood tattoos will be beneficial signal in prison, but not so good on a street corner in West Baltimore.

Does Caplan say it is pure signalling? I don't think so. But the signalling is what monetizes it.

The question is could you get the human capital part (as opposed to the signal) much cheaper elsewhere.
BTW Bryan Caplan says 80% signaling and 20% human capital, that seems about right to me.

Disagree. Many people are incapable or unwilling to undertake self-directed learning. They're not incapable of learning per se; they're just not able to make it happen by themselves without resources to assist them and without any accountability. That's what college provides. If you sit in a class for a semester, pay attention and commit to doing what it takes to earn an A or a B then it's almost impossible to come away having not learned anything at all.

... and, hopefully, they have picked up some skills in how to figure stuff out quickly. For most undergrad degrees, most of the benefit is in the flexibility and power of mind gained, not the content of a particular major.

On the signalling point, the other obvious thing is that an internship signals willingness to deal with a real workplace, and hopefully experience functioning in one. If you're sorting apps, you'll use that.

There's also a thick layer of tacit knowledge about what a business is and what an employer is likely to want that a lot of graduating seniors lack. As a result they write terrible CVs and letters of application.

Er, sure. I imagine all those nurses could have easily learned how to put in an IV and do drug dosage math on their own. And those electrical engineers gained nothing of value from their classes. And those farm kids in the ag classes that teach newer, modern methods that they can take home to their family farmers are just signalling, really.

And you are basing this assertion on what precisely? Are we supposed to just take that as self-evident?

Internships are certainly beneficial in the tech sector. If I were giving advice to a recent high school graduate who aspired to become an engineer or software developer I would absolutely recommend that he extend his or her undergraduate career and spend a year (or two) in a full-time co-op. The benefits are legion:

1. You get paid pretty well; industry average is about $20/hr for an engineering/CS senior co-op,
2. You (hopefully) get something meaningful to talk about in an interview,
3. You (hopefully) learn something, even if its just "this is how things actually work in industry",
4. You get course credit,
5. You (hopefully) make personal connections with managers who might want to hire you after you graduate.

While I'd recommend the degree, in the 2014 job market it's not really hard to get a job without a degree, or with a degree but without an internship.

Eh. Tech is more amenable to people who have skills but no degree, but even there I think it can be an impediment. To get experience you have to convince someone to hire you. To get hired you have to have experience (or a degree). The degree allows you to short-circuit the circular chicken-and-egg problem. As a developer, I tend to also be a little skeptical of people who have experience but no degree. Only because there are some things (that I think are useful) typically taught in university C.S. programs that you're not likely to learn on the job.

W.r.t. co-ops, I still think they're a good idea. You can get a job without one, but maybe you can get a better job with one. Or you can get a job more easily. Or you can negotiate a higher starting salary at a given job. Having real, meaningful industry experience as a newly minted college graduate sets you apart from other recent graduates who lack that same experience. Plus, research-oriented C.S. programs often neglect some topics that are pretty useful in an industry setting; by co-oping you (hopefully) fill in those gaps in your education.

Funny, but I'm skeptical of programmers with degrees. If they graduated in three years, that's one thing. If they graduated in five years, I'm thinking they are going to be a clock puncher. A programmer with an advanced degree is trying to fool people, unless it is something like an MBA.

But, I have not been in a cubicle farm for a long time so my views are probably out of line with the run of the mill coding shop.

Re: time-to-graduation. My school's C.S. program required about 150 credit hours, where 12 hr/sem was the limit to be considered a full-time student and 15 hr/sem was normal. If you didn't place out of anything and didn't go to school during the summers you were looking at a 10-semester (5 year) college career. Or you might place out of a year of classes but decide to do a two-semester co-op to gain work experience. Again, five years. Not sure why that should count against someone.

I'm a programmer w/ an advanced degree, btw. As far as I know I'm not trying to fool anyone. Got talked into graduate school by a professor, was moderately interested in academia, then goofed around and never settled on a topic. Got out with a M.S.

The people making decisions about internships are not graduating seniors, they're freshmen and sophomores. So they are thinking about the job market in 2017, which is more uncertain. Also, not all jobs are equal, nor are all majors.

When I interview potential hires, I like to know that they got their hands dirty in internships or serious project work with a research group at school. I'm nervous about people with nothing but classroom experience. Leaving skills out of the discussion, how do I know they're actually going to like working? (Yeah, yeah, I know, people can fake that. But it continues to astound me how often I interview some young person who says "I did X and didn't like it, so then I switched to Y and that was terrible, then I did Z but my boss was a jerk, and now I'm totally convinced I want to be [insert whatever you're hiring for].")

It occurs to me that in some awful, awful majors, the people who are making decisions about internships _are_ graduating seniors. You should avoid those majors.

There might be collinearity with another variable: parental or other connections at the time the internship is granted, and later connections when a kid gets a full time job.

How many of you have tried getting a decent internship without either being in a degree seeking program or having a degree?

Internships and degrees are both part of the pre-job training most of us have to complete before getting a decent job

And how likely are you to get an internship in a financial firm with a humanities degree? Im not saying a humanities degree is worthless, but it must have some informative value on the ability, desire, preferences of the parties. It could easily be the case that the humanities majors who do get internships in financial services are exceptionally and demonstrably good.

Outside of hardcore STEM fields, where you go to school is much more important than your actual major. A history major from Harvard has a better shot at working in investment banking than a finance and accounting double major from GMU.

Agreed. I have a buddy who did his thesis at Cambridge on ancient Etruscan History and worked for Barclay's in Investment Banking. On the other hand, attending a Global Top 50 State school, US Investment Banks didn't even recruit at our Business School.

How true is this outside of the well-known national Universities? For instance, is a history major from 60th ranked Southern Methodist University more likely to get a job in investment banking than a Math/Financial Engineering double major from 101st ranked Iowa State University? My guess is that the "school name effect" quickly loses it's value outside of the top 20 or 30 universities.

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