Matching and Market Clearing in the context of internships
We often think of market clearing in terms of a buyer and a seller. One person has goods or commodities that the other buyer wants to procure. Buyers can establish costs of their goods, and sellers can either match that cost, or withdraw from the exchange. However, market clearing can be extended to a variety of contexts: stable matching, and practically, job search. We can model real life problems using the idea of market clearing or matching, with recruiters as sellers and candidates/students as buyers. Ideally, we’d like to match every student to some potential recruiter/job, but realistically, that isn’t possible, and is usually how it is shown in real life statistics. While intern hiring is on the rise in recent years, the absolute percentage is still minuscule. For example, it is set to grow 1.7% this year for summer internships and 0.6% for co-op opportunities. Overall unemployment rate is 3.7% and 81.2 percent are employed or pursuing higher education. This number is high, but that still leaves out a fifth of the college population in terms of any opportunities.
Clearly somewhere in the matching process, some students were not matched. The market didn’t clear equally on both sides, and left some “buyers” without product. As we mentioned before, there’s a cost for buyers to purchase. In this case, the cost is a series of requirements (GPA, soft skills, interviews, etc.) to actually warrant getting the product. Each buyer has preferences (to companies), each seller has preferences (to candidates), and it makes sense in a matching model that not all candidates are physically able to be matched. In terms of stable matching, preferences are taken into account when deciding the pairings, which makes sense in real life too. Top-tier jobs might recruit top talent.
http://www.naceweb.org/job-market/internships/hiring-projections-for-internship-and-co-op-positions/