College students sometimes work as summer interns for...

College students sometimes work as summer interns for private firms or the government. Many of these positions pay little or nothing. a. What is the opportunity cost of taking such a job? b. Explain why students are willing to take these jobs. c. If you were to compare the earnings later in life of workers who had worked as interns and those who had taken summer jobs that paid more, what would you expect to find?

Transcript

00:01 Hello, i'm going to answer your question today about college students and summer internships.

00:07 So, basically, i make a quick research about papers, but this is the economic intuition, but just as you have in mind, there are a lot of literature that have talked about this topic, so i'm going to first introduce you in the theoretical way and then maybe talk a little about the empirical results that they have found, so you have a more complete opinion.

00:28 So the first question would be, what is the opportunity cost of taking such a job? you get paid first the best second option would be to get a paid position as a low -scale worker so what literature have found is that people that doesn't do summer internships they tend to do low -skill works like cleaning work or waiters or just in the dining industry or they just get a summer vacation in this case this will be another good option then they say what is the opportunity sorry the second question will be why students are willing to take these jobs and there are normally two reasons.

01:05 The first working experience on the relevant field.

01:07 So for example on the creative industry people that have experience are really are really can easily find a job so relevant work experience tends to make people motivate to make unpaid internships also working in relevant companies so you can see for example sony and especially in the united states this is a tendency that is increasing and it says if you were to compare to the the earnings later in life of workers who had work as an intern and those who had taken summer jobs that paid more what would respect to find.

01:42 So the idea would be that people that have internship because they have relevant work experience compared with the people that have works that get just paid are going to be better paid in the future.

01:54 What is the issue that the idea is that these workers have to be less prepared or they already have some investments so they don't need to have as much mentorship as the other kind of workers.

02:07 But the literature have found that this is not very true.

02:10 Because first, only a few amount of people can afford to make an unpaid internship...

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