Unpaid Internships and Equality of Opportunity: A Pseudo-Panel Analysis of UN Data

Abstract

One of the most pressing arguments against unpaid internships is that they impose a barrier to upward economic mobility. Intern experience leads to better employment outcomes, yet only individuals from relatively advantaged backgrounds can afford an unpaid stint of three to six months, resulting in unequal access for individuals of more modest means. This could be particularly relevant in an international organization context, where individuals from a broad spectrum of nationalities are employed. Using a unique intern dataset, I test this hypothesis in a pseudo-panel linear probability model of paid versus unpaid internships, conditional on two proxies for equality of opportunity: parents education and developing country origin. I find that having more highly educated parents leads to a 30% higher chance of taking an unpaid internship, confirming the unequal access hypothesis; however, more surprisingly, I find that individuals from developing countries are much more likely to take an unpaid internship (75% higher) than their developed country counterparts. These results are robust to several different specifications, yet contradict cross-section OLS estimates, suggesting that the influence of unobserved time-invariant heterogeneity is substantial.

Keywords: equality of opportunity, internships, pseudo-panel, social mobility, unpaid labor

JEL Classification: D63, J32, J45, J47, J62