Janez Šušteršič, Bojan Nastav, Tanja Kosi University of Primorska, Faculty of Management Koper
Abstract By taking on occasional temporary jobs, students may gain valuable experience that might enhance their future opportunities in the labour market. On the other hand, the preferential tax treatment of their earnings gives them more an incentive to work than to study and therefore to delay their graduation in order to keep the valuable »student status« for as long as possible. This article provides statistical tests of the hypothesis that student work increases drop-outs and thus delays the time to graduation. We use a rich sample of individual-level data, provided by one of the several student employment services and including information on students' time devoted to work, type of their activity and their academic performance in terms of fulfilling all the requirements for regular progression to successive years of study. The results reveal some evidence for this hypothesis, but it is not as clear-cut as expected. Moreover, there is also some evidence that student work does provide valuable experience for some students. Key words: student work, regulation, labor market, youth, unskilled workers, graduates JEL: J08, J21, J42, J44
By taking on occasional temporary jobs, students may gain valuable experience that might enhance their future opportunities in the labour market and, if related to their field of study, even increase their academic motivation. On the other hand, should they be lured or forced into an extensive work engagement to increase their earnings, this may reduce their academic effort, delay their studies or increase drop-outs. It is hard to form any strong a priori expectations as to which of the two effects would prevail. This paper provides an empirical test of their importance.
The paper is motivated by the current public debate in Slovenia about the merits and perils of student work. The existing legal framework provides considerable fiscal and regulatory allowances both for students who take up occasional jobs and their employees. It is thus not surprising that most students in Slovenia work. According to the Labour Force Survey (SORS1, LFS 2008), 82 percent of students younger than 24 years took on occasional jobs in the first quarter of 2008. Another survey (Euroštudent SI 2008) estimated this share at 65 percent and reported that students spent a third of their active time working rather than studying. According to Ministry of Labour data, the total amount of students' earnings increased by 60.7 percent from 2005 to 2008. The institution of student work in Slovenia, initially introduced with the aim of giving students a chance to sustain themselves while studying and to gain some valuable work experience, has come under severe critique in recent years. Ignjatovič and Trbanc (2009, 44) claim that students, being both a cheaper and a more flexible labour force, crowd out young graduates from the labour market. Moreover, the preferential tax treatment of their earnings provides an incentive for students to work rather than study, and to delay their graduation in order to keep the valuable »student status« for as long as possible. In this way, the particular institution of student work is allegedly responsible for the long average time to graduation in Slovenia. Existing discussions are based on scarce survey data and anecdotic evidence and the arguments are not supported by formal statistical tests. This article fills the gap by providing statistical tests of the assertion that student work increases drop-outs and thus delays the time to graduation. We use a rich sample of individual-level data, provided by one of many student employment brokerage services2 and including information on students' time devoted to work, type of their activity and their academic success in terms of regular progression into the successive year of study....