Student employment in Europe and subsequent labour market outcomes

The study investigates the impact of student employment on the post-graduation employment and salaries of university graduates in 13 European countries. We use a unique and rich dataset of European graduates from the 2017 and 2021 cohorts, which allows us to account for potential selection on observables using OLS with entropy balancing weights and address potential selection on unobservables using an IV approach and the Oster test. In addition, we test human capital versus job-market signaling explanations for the returns to student employment by comparing returns for self-employed and employed graduates, as well as by examining how returns to student work experience evolve over time. The results indicate a positive effect of student employment on both employment and salaries after graduation, with larger effects for work related to the field of study and smaller effects for study-unrelated work. We find no evidence that these returns diminish over time or that they differ between employed and self-employed graduates, which supports a human capital explanation of the returns to student employment. The analysis reveals considerable cross-country variation: returns are higher in many post-socialist Eastern European countries, which have experienced significant massification of higher education over the past three decades.