From Uruguay the recipe that dispels the myth of the trade-off between school and work

Entering the labour market is often a difficult transition for young people. In many countries, youth unemployment rates are on average about three times higher than those of adults and many young people remain Neet, i.e. not in education, employment or training. In Latin America, youth unemployment reached about 14% in 2023, while almost one in five young people were neither studying nor working. Although doing a job during the study period can reduce the time available for study itself, it can also offer valuable work experience and a first contact with the formal labour market. Whether the benefits outweigh the costs is therefore a central question for youth employment policies.

Our recent research provides the first long-term causal evidence on this issue (see Ferrando, Katzkowicz, Le Barbanchon and Ubfal, 2025). We analyse the Uruguayan national programme Yo Estudio y Trabajo ('Study and Work'), which offers students selected by lottery formal part-time jobs lasting one year, provided they remain enrolled in school. By following nearly 90,000 applicants over seven years, the randomised design allows for credible isolation of the programme's effects - an evaluation of exceptional rigour in this policy area.
The results indicate significant and persistent improvements in employment outcomes. Seven years after entering the programme, participants earn about 11% more in formal employment than similar candidates who were not selected. These results reflect both higher employment rates - about four percentage points - and higher monthly wages of about 6 per cent more. Crucially, these benefits persist well beyond the duration of the programme, far exceeding the two- or three-year observation periods typical of most evaluations of job training programmes.

It is equally important to note that there is no evidence of any negative effects on education. On the contrary, participants complete slightly more years of study, with an average increase of about 0.27 years. The probability of attending secondary school also increases up to four years after entering the programme, at a time when the programme's school enrolment requirement is no longer binding. The initial requirement to remain enrolled appears to help young people to successfully combine work and study in the long run, demonstrating that the two activities can reinforce each other rather than hinder each other.
The benefits of the programme extend even beyond the first work placements. Over time, participants spread across a wide range of sectors, suggesting that the skills, habits and experience gained are widely valued by employers. Although the effects are more pronounced for men, they also remain positive for women and young people from more disadvantaged backgrounds.

From a public policy perspective, the programme proves to be both effective and fiscally sustainable. Despite relatively high initial costs, cost-benefit analysis shows that the programme pays for itself through increased tax revenues when participants reach middle age. The long-term return to public finances is comparable to that of some of the most successful early childhood interventions, a remarkable achievement for a policy targeting the youth labour market.
Overall, our results show that well-designed work-study programmes can significantly and sustainably improve the employment prospects and incomes of young people, while preserving - and indeed strengthening - their educational pathways. In contexts where the transition from school to work is particularly uncertain, Uruguay's experience shows how combining part-time work and education can generate lasting benefits for both individuals and society. Similar approaches could also produce positive results elsewhere, provided quality of work, close integration with the education system and strong involvement of employers are ensured.

* Department of Economics Bocconi University