Well-designed work-study programs can boost young people’s long-term job prospects and earnings, easing their transition to adulthood
Young people often struggle to enter the labor market. In most countries, youth unemployment is about three times higher than adult unemployment, and many remain NEET (not in education, employment, or training). In Latin America, for example, youth unemployment stood at roughly 14% in 2023, and nearly one in five young people were NEET. Although early jobs might reduce time available for schooling, they can also provide valuable experience and a first opportunity for formal employment. Understanding which effect dominates is crucial for designing effective policies.
Our recent research provides the first long-term, causal evidence on this question. We study Uruguay’s national Yo Estudio y Trabajo (“I Study and Work”) program, which offers part-time, year-long formal jobs to youth selected by lottery, on the condition that they remain enrolled in school. Tracking nearly 90,000 applicants for seven years, the randomized assignment allows us to measure the program’s true impact, an unusually strong evaluation design in this context.
The results show clear and lasting improvements in participants’ formal labor market outcomes. Seven years after entering the program, participants earn about 11% more in formal jobs than similar applicants who did not win the lottery. These gains stem from both higher employment rates (a 4-percentage-point increase) and higher monthly wages (around 6% more pay). Importantly, these effects persist long after the program ends, far beyond the two- or three-year follow-up periods typical of most job-training evaluations. In our case, we found effects up to seven years after the program ended.
We also find no evidence that participating in the program harms education. On the contrary, participants complete slightly more schooling —about 0.27 additional years— and their likelihood of attending high school is higher for up to four years after the program. The requirement to stay enrolled appears to help young people successfully combine work and study, showing that the two can be complementary rather than competing commitments.
The benefits are not limited to the sectors where participants first work. Over time, they move into a variety of industries, suggesting that the skills and experience gained in the program are broadly valued by employers. While the effects are especially strong for men, they remain positive for women and for youth from disadvantaged backgrounds.
From a policy standpoint, the program delivers gains that are both meaningful and cost-effective. Despite relatively high upfront costs, our cost-benefit analysis shows that the program pays for itself through additional tax revenues by the time participants reach age 46. Its long-term return to public funds is comparable to some of the most successful early-childhood programs, which is notable for a youth labor market intervention.
Overall, our study shows that well-designed work-study programs can significantly improve young people’s job prospects and earnings over the long run, helping to ease the transition to adulthood. In settings where many young people face uncertain school-to-work pathways, Uruguay’s experience demonstrates that combining part-time work with continued schooling can generate durable benefits for both individuals and society. These results suggest that similar programs could be effective elsewhere, provided they ensure job quality, close integration with education, and strong employer involvement.
© Mery Ferrando, Noemi Katzkowicz, Thomas Le Barbanchon, and Diego Ubfal
Mery Ferrando is Assistant Professor at Tilburg University, Netherlands
Noemi Katzkowicz is Assistant Professor at the Universidad de la Republica Uruguay, Uruguay
Thomas Le Barbanchon is Professor at Bocconi University, Italy, and IZA Research Fellow
Diego Ubfal is Senior Economist in the World Bank's Gender Group, US, and IZA Research Fellow
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We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.
Related IZA World of Labor content:
https://wol.iza.org/articles/youth-extracurricular-activities-and-importance-of-social-skills-for-supervisors by Vasilios D. Kosteas
https://wol.iza.org/articles/youth-sports-and-accumulation-of-human-capital by Michael A. Leeds
https://wol.iza.org/articles/the-role-of-cognitive-and-socio-emotional-skills-in-labor-markets by Pablo Acosta and Noël Muller
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