Abstract
We study whether the completion of an optional professional year placement during undergraduate studies enhances job quality, in terms of earnings, job security and career fit, for economics graduates from a UK university. Using linear and discrete choice models, we estimate the effect of doing a professional year placement on four graduate outcomes that capture job quality and use a rich data set to control for demographics, educational background, academic achievement, degree, and graduate job characteristics. To account for possible self-selection bias, we use propensity score matching. We find a positive but weak effect of the professional year placement on earnings, but the salary gap becomes statistically insignificant once we control for self-selection. Similarly, we find no conclusive evidence supporting a positive effect of professional year placement on job security. However, we find a positive and robust effect of professional year placement on career fit: placement graduates are more likely to find jobs that fit their career plans than non-placement graduates, which holds even after controlling for self-selection. The empirical findings also show that job characteristics, like location and type of industry, and school background are additional factors contributing to graduates' employment quality. Finally, we find no differences in job quality due to gender.