DP13826 The Effects of Working while in School: Evidence from Uruguayan Lotteries

Author(s): Federico Araya, Thomas Le Barbanchon, Diego Ubfal
Publication Date: June 2019
Keyword(s): randomized lottery, student employment
JEL(s): I21, I28, J08, J22, J24
Programme Areas: Labour Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13826

We provide the first estimates of the effects of working while in school that use controlled random variation in job offers. We leverage a Uruguayan program offering 9-to-12-month part-time employment in state-owned companies by lottery to enrolled students. Using social security data matched to the universe of over 120,000 applicants, we estimate a 9% increase in earnings over the four post-program years for youth completing a program job. We find large positive effects on school enrollment during the program year, consistent with the conditionality of the program and smaller effects in the post-program years. Our time-use survey indicates that students substitute leisure and household chores with work, without significant reductions in studying time. Finally, a decomposition of the earnings effect shows that accumulation of work experience can explain the majority of the increase in earnings.