This study examines the effect of participation in cooperative education (co-op) programs on engineering undergraduate students' academic and employment outcomes, with particular attention to diversity in engineering. Co-ops are partnerships between an academic institution and an employer designed to engage students in early practical work experience through rotations of full-time employment and full-time traditional classroom study. Previous studies highlight the positive academic and employment returns to participating in co-ops. However, among voluntary co-ops, it is unclear to what extent these potential benefits can be attributed to the causal effect of engagement in co-ops versus the selection of higher-performing students. This study addresses this selection issue by using propensity score matching. Data come from 12 cohorts of engineering undergraduate students from a large, research-intensive institution in the Midwest. Results indicate that co-op participants are more likely to graduate in an engineering major and to have higher overall grade point averages compared to their non-co-op peers. On average, co-op participants are also more likely to obtain engineering jobs and to earn higher starting salaries post-graduation than their non-co-op peers. Although Hispanic/Latino students are less likely to participate in co-ops, underrepresented racially minoritized students who complete co-ops are more likely to graduate in engineering and to earn higher starting salaries post-graduation than those who do not participate. Research findings provide support for promoting co-ops as a potential strategy to help improve student academic and employment outcomes with implications for potentially diversifying the engineering workforce downstream.