In today's educational landscape, the question of whether students should work while enrolled in school has become a topic of debate. On one hand, economic theory suggests that working alongside academic study could smooth the transition from school to work. On the other hand, work could potentially detract from study time and harm academic outcomes. To shed light on this issue, we will explore the effects of working while in school on labor and education outcomes, drawing insights from a recent study conducted in Uruguay [[SOURCE 1]].
Effects on Labor Outcomes
The study examined the impact of a work-study program offered by lottery in Uruguay. The program targeted students aged 16 to 20, offering them a part-time job in state-owned companies. The results showed that during the year of the program, earnings of treated participants more than doubled compared to the control group. Although participants were not allowed to keep their jobs in program firms after the program ended, their average earnings soon converged to that of the control group in the following year. However, the earnings effect of the program became statistically significant two years after its completion and continued to grow over time. On average, the program participants earned $285 more than comparable youth in the control group, representing a 9% increase in earnings [[SOURCE 1]].
Effects on Education Outcomes
While the work-study program provided participants with valuable work experience, it also had positive effects on their education outcomes. During the program year, the program conditionality on enrollment led to a 12-percentage-point increase in school retention compared to the control group. Even after the program ended and the enrollment requirement was no longer in effect, the post-program enrollment rates remained higher within the treatment group. Over the two years following the program, the enrollment rate of treated youth was between two and three percentage points higher than the control group's enrollment rate of 56%. This suggests that working while in education does not crowd out future school investment but instead provides evidence for "crowding in" [[SOURCE 1]].
Decomposition of Earnings Effect
To understand the relative contributions of work experience and education to the earnings effect, a decomposition exercise was conducted. The results showed that the increase in work experience accounted for 50% of the earnings effect, while the increase in education accounted for 20%. The contribution of work experience was driven by both quantity and price effects. Although the increase in work experience led to higher earnings, the returns to experience were lower in the treatment group compared to the control group. This suggests that working while in school increased productivity. Additionally, the study found that program participants were more likely to engage in activities such as reading, writing, and using computers, indicating that they were "learning on the job" [[SOURCE 1]].
The findings of the study support the further development of work-study programs as a means of enhancing both labor and education outcomes for students. The positive effects on earnings and enrollment rates highlight the potential benefits of combining work experience with academic study. However, it is important to consider the specific features of the program assessed in the study, such as the provision of high-quality jobs compatible with schooling and the conditionality on enrollment. These factors may have contributed to the success of the program and should be taken into account when implementing similar initiatives in different contexts [[SOURCE 1]].
In summary, the empirical evidence suggests that working while enrolled in school can have positive effects on both labor and education outcomes. By acquiring valuable work experience, students can enhance their skills, signal their productivity to employers, and secure funding for their studies. Moreover, working while in school does not appear to negatively impact academic performance or future school investment. These findings provide valuable insights for policymakers and educators as they consider the role of work-study programs in supporting students' transition from school to work [[SOURCE 1]].