Paying disadvantaged teenagers to stay in school slightly raises enrolment but does not improve qualifications or future job prospects
Improving the lives of disadvantaged young people is a central priority for governments in advanced economies. Standard policy tools to improve their skills through education, such as raising the compulsory school-leaving age have produced modest results. Conditional cash transfers — paying students or their families to stay enrolled — have generated large gains in low- and middle-income countries, but evidence from high-income settings, where the marginal returns to extra schooling may differ, is scarce.
In a recent paper, we evaluate the Education Maintenance Allowance (EMA), the largest conditional cash transfer ever run in a high-income country. Piloted in parts of England from 1999, rolled out nationally in 2004 and abolished in England in 2011, the EMA paid up to £30 a week (around £1,400 a year) to 16–19-year-olds from low-income households who stayed in full-time education beyond the leaving age of 16 and attended regularly. Work-based training and part-time education were not eligible for the award.
We use newly linked administrative records tracking around 600,000 students per cohort, including roughly 25,000 pupils eligible for free school meals, our main sample, into their early thirties. The data span exam results, university entry, employment, earnings, benefits and convictions. To identify the programme’s impact, we compare students in areas that received the EMA early with similar students elsewhere who gained access only when the scheme was extended nationally in 2004.
The programme did succeed in one immediate objective: it increased participation in post-compulsory education. But the effect was modest. Participation rose by only 3 percentage points, from a baseline of 51%.
More striking is what did not happen. Staying longer in education did not translate into better qualifications overall. Nor did it improve long-term economic outcomes. By age 31, eligible young people were no more likely to be employed and earned no more than comparable individuals who had not received the programme. Our estimates rule out even small earnings gains above 0.3% per year.
The effects also differed sharply depending on students’ prior academic achievement. Higher-performing teenagers were somewhat more likely to enter university, but not more likely to complete a degree. Lower-performing teenagers stayed in education longer, but without gaining additional qualifications. They were also more likely to be economically inactive at age 18 and earned less throughout much of their twenties. One encouraging finding stands out: among lower-attaining teenagers, the programme reduced criminal convictions.
To weigh costs against benefits, we calculate how much social value is created for each pound of net public spending. Our central estimate is 0.85. In other words, the programme generated benefits, but less than a simple cash transfer would have delivered mechanically in the absence of administrative costs.
The lesson is that, in high-income countries, money alone may not address the main obstacles facing disadvantaged young people. When education is already free and families often receive other forms of support, affordability may not be the central problem. For some young people, especially those with weaker academic records, the programme appears to have encouraged longer stays in courses with limited labour-market value, while discouraging work-based training or early work experience.
Financial support can help. But this evidence suggests it works best when combined with clear pathways into employment, practical training, and courses that build skills employers actually value. Cash alone is not a magic solution.
© Jack Britton, Nick Ridpath, Carmen Villa, and Ben Waltmann
Jack Britton is Senior Research Economist at the Institute for Fiscal Studies (IFS), UK, and IZA@LISER Fellow
Nick Ridpath is Research Economist at the Institute for Fiscal Studies (IFS), UK
Carmen Villa is Assistant Professor at the University of Zurich, Switzerland
Ben Waltmann is Senior Research Economist at the Institute for Fiscal Studies (IFS), UK
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https://wol.iza.org/articles/how-do-adult-returns-to-schooling-affect-childrens-enrollment by Kenneth A. Swinnerton
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