Abstract
Cooperative education (co-op) is a program in which participating students typically alternate between full-time study and paid full-time employment. Choosing to participate in a co-op program usually delays the student’s graduation by one year, but may increase the student’s job market prospects. This paper estimates the response of co-op participation to the engineering field-specific average wage for recent graduates. We find that a $10,000 real increase in the average initial wage causes a 5.4 percent decrease in the co-op program participation. In addition, there is heterogeneity in the response by student ability. Though high-ability students are more likely to participate in a co-op program than students of lower ability, we find no evidence that high-ability student’s participation choice is influenced by job market conditions. This is consistent with a model where students choose to participate in a co-op program primarily to increase employment prospects after graduation and where high-ability students in engineering face little risk of lower job market prospects due to a worse labor market.