Determinants of students’ salaries in the professional training year

Abstract

This paper studies the main determinants of salaries for economics students in their year-long industrial placements. Using three different sources of data on three cohorts of economics placement students, including demographic characteristics, academic performance, programme of studies and employability-related characteristics, we find that academic performance, job location and industry type are the main determinants of placement salaries. We show not only that students’ academic performance can increase the returns of the placement year due to the possibility of high salaries, but such returns significantly increase at the top of the salary distribution. Students’ previous job experience also matters for high-paying placements. Conversely, demographic characteristics, such as age, nationality and ethnic background, do not appear to determine placement salaries. Finally, we find no evidence of gender differences in wages.