By Karen Rivedal, Office of Research & Scholarship

A new national study coauthored by UW–Madison School of Education Professor Mindi Thompson, who directs the university’s Center for Research on College‑Workforce Transitions (CCWT), offers compelling evidence that paid internships give college graduates a lasting advantage in earnings, job quality, and early career progression.

Published in the journal Research in Higher Education as part of a special issue highlighting the value of federal education datasets, the study, “Work-Based Learning and Early Career Outcomes: Evidence on Earnings, College-Level Employment, and Career Progression,” uses data from the National Center for Education Statistics (NCES) to track more than 26,000 students who completed bachelor’s degrees in the class of 2016. The study team includes Hee Song, a UW–Madison doctoral student in Educational Policy Studies and Nichole Torpey‑Saboe, Vice President of Research at Strada Education Foundation.

The research team examined five types of work-based learning — paid internships, unpaid internships, co‑ops, practica, and federal work-study jobs — and followed graduates one year and four years after earning their degrees. To isolate the impact of these experiences, the team also used a matching design that pairs students with similar academic, demographic, and institutional backgrounds. This approach helps rule out the possibility that internship benefits simply reflect the strengths of those who tend to secure them.

By leveraging NCES’ nationally representative longitudinal data and a rigorous matching design, the study provides new evidence that paid internships consistently support stronger early career outcomes, and that these benefits are not simply the result of self-selection bias.

Paid internships stand out

Across all models, paid internships emerged as the strongest and most consistent predictor of positive early career outcomes. Graduates who completed paid internships earned $5,564 more one year after graduation and $9,089 more four years out. They were also significantly more likely to hold jobs requiring a bachelor’s degree and to report that their first job was part of a career they were pursuing.

“These findings show that paid internships are not just nice to have — they meaningfully shape graduates’ early career trajectories,” said Thompson, who holds the Charles and Carol Pulvino Department Chair within the School of Education’s Department of Counseling Psychology. “The earnings boost alone represents a substantial return on investment for students.”

The advantage persisted even after controlling for GPA, test scores, family income, parental education, race/ethnicity, gender, field of study, and institutional selectivity.

Mixed results for other work-based learning

The study found no earnings benefits for unpaid internships, co‑ops, work-study jobs or practica, which are highly structured, supervised field placements distinguished by being closely tied to a specialized academic curriculum. However, unpaid internships and practica were associated with a higher likelihood of securing a job requiring a degree or a job considered part of a career.

Work-study and co‑ops showed no significant relationship to earnings or career progression. A co-op, or cooperative education, is a structured work program that allows students to alternate academic study with periods of full-time, paid professional employment in their field of study.

“These experiences may offer important learning or field exposure, but they do not appear to translate into higher wages in the early years after graduation,” said Song.

Why paid internships matter

The authors tested three hypotheses that might explain why work-based learning improves employment outcomes:

• Human capital, including skill development
• Social capital, such as professional networks
• Symbolic capital, also known as resume signaling

All three mechanisms showed some support, but the strongest evidence pointed to symbolic capital, which is the idea that paid internships send a powerful signal to employers about a candidate’s motivation, professionalism, or readiness.

“Our analysis suggests that employers treat paid internships as a meaningful indicator of candidate quality,” said Thompson. “The signal itself appears to carry weight, even beyond skill development or networking.”

But the study also highlights persistent disparities in access to paid internships. Black, Hispanic, American Indian, and Native Hawaiian students were more likely to hold unpaid internships. Participation in paid internships also varied by gender, income, and field of study.

Given the strong payoff of paid internships, the authors argue that expanding access is essential for promoting economic mobility.

“Students who most need the earnings boost are often the least likely to access paid internships,” Thompson said. “Addressing that gap is a critical equity issue.”