While it may be tempting to assume that students at university should be devoting their full energy to their studies, research from Bocconi University suggests that a well-designed work-study program can significantly boost human capital.
The researchers analyzed the Yo Estudio y Trabajo (YET) program in Uruguay, which aims to provide students with part-time work experience in a range of state-owned companies over the course of a year. They found that two years after the program, the participants had 6% higher wages and 8% higher earnings than those who hadn’t participated.
Rounded benefits
What’s more, these gains weren’t achieved at the expense of academic performance, as participants seemed to actually perform better at school than their non-participating peers. This was especially so for participants from disadvantaged backgrounds, which the researchers believe is due to the support the income gave to their studies, while also providing them with insight into the returns they could achieve from their academic life.
“While participants acquired more work experience, they also acquired more education,” the researchers explain.
YET aims to offer well-paid work to participants in state-owned organizations to provide them with not only a good opportunity to learn about working life but also to make vital connections. The assignments are typically for between 9-12 months and 20-30 hours each week, with the pay for each assignment fixed at $446 per month (in 2016). This compares with a national minimum wage of $372 per month for a full-time job.
Random chance
Crucially, whereas many internships in the west are secured through personal connections, the jobs in the YET program are assigned via a lottery, with enrollees having about a 3% chance of being selected.
The results show that the focus on work-related skills within the program played a huge role in the future boost to earnings among participants. Indeed, conscientiousness received a particular boost, with participants gaining first-hand experience of the kind of habits and behaviors needed in the workplace.
The program also provides hugely valuable human capital that doesn’t appear to be specific to the particular industry that the participants worked in.
“Working while in school is controversial,” the authors conclude. “While some countries have promoted policies encouraging youth to study without working, others have designed programs that encourage youth to work while in school. Our results suggest the practice, when well-designed, can have positive effects—even more positive for the Uruguayan program than for shorter-duration US programs investigated by scholarly literature.”
