Based on ads from an internship-specific website, a recent IZA paper by David Jaeger, John Nunley, Alan Seals, and Eric Wilbrandt shows that internships are less likely to be paid when the local unemployment rate is higher and when minimum wages are higher, indicating a clear link between the regular labor market and the market for interns. Internships more closely associated with a specific occupation are more likely to be paid.
The authors use a résumé audit study with more than 11,500 applications submitted to examine the determinants of success in the internship market. They find that previous internship experience is key to landing another internship, particularly for unpaid internships. Applicants with black-sounding names are less likely to receive a positive response from firms, as are applicants that are located further away from firms.
The results of the audit study suggest that firms consider whether applicants will accept or can afford to take an unpaid internship. If internships play an important role in subsequent labor market success, less advantaged students may suffer by not being able to take internships during college. The authors argue that providing financial support to allow students to take unpaid internships may level the playing field.