Returns to Chinese College Student Investment of Time in Internships and In-School Learning: A Theoretical Model and Empirical Analysis

Abstract

Investment of time in internship and in-school learning or study are two ways to accumulate human capital for college students. The authors take I&S input as two impacting faAQctors for graduates’ starting salaries to construct an I&S input allocation model minimizing “psychological cost.” The model inference indicates that the optimal allocation of I&S input relies on three aspects: returns to I&S of the future labor market, graduates’ cognitive attitudes toward the role of I&S, and the comparative advantages of I&S. The authors use the 2015 China College Graduates’ Employment Survey data conducted by the Institute of Education at Peking University to empirically verify the theoretical model. They found that under the current labor market conditions, the time input on I&S does not necessarily bring better returns, and there is a significant difference among student groups between the actual I&S time input and the “theoretically optimal values” predicted by the model. The authors conclude that the failure of allocating the I&S time input will hinder graduates’ successful transition from universities to the labor market. To avoid this time input imbalance, institutions should strengthen the guidance of I&S time input, improve the related management system, and pay more attention to I&S input quality and optimal allocation.