Outcomes from combining work and tertiary study

Working in some capacity is almost considered de rigueur for tertiary students. The reasons for working and the impact this has on both an individual's ability to complete their studies and on their post-study labour market outcomes are only recently receiving attention.

Using the 1995 and 1998 cohorts of the Longitudinal Surveys of Australian Youth (LSAY), this study investigates the motivations for and the education and employment outcomes from working while studying for both vocational education and training (VET) and higher education students. The authors find that income is an important motivating factor: those in receipt of income support are less likely to work while studying, although this is dependent on whether the student is still living at home.

Key messages

• For those studying full-time, working impacts on completion—the more hours worked, the greater the effect. For example, working 16–24 hours a week reduces the completion rate by eight percentage points, while more than 24 hours reduces it by 14 percentage points.
• Finding work in a job considered a 'career' job while studying has a significant and positive impact on course completion for both VET and higher education students.
• For all tertiary students, being employed in the final year of study improves the chances of finding full-time employment, even three years after completing the course.
• Interestingly, for both full- and part-time students, the longer they have been employed in a job, the greater the likelihood of course completion, while past work experience also increases the likelihood of completion for full-time students (2.5 percentage points per year of employment). Perhaps this reflects that these students have better time management skills.

Thus it is clear that combining study and work does have significant effects on completion and future employment prospects. Too much work negatively impacts on study completion, but on the other hand work experience does benefit future job prospects. The ideal combination would be modest hours of work in a job relevant to a future career—but this will be difficult to achieve for many students.

Tom Karmel
Managing Director, NCVER

Background

For the majority of tertiary students aged 25 and younger in Australia, working while studying is the norm; however, the motivating factors and educational and post-study labour market outcomes of working during this period of their lives are largely unknown. For young people, the chance to experience work is likely to help them to develop both general and job-specific skills that will help them successfully transit into the labour market after study. On the downside, there is also the risk that time spent in work may take away from time studying, thereby reducing chances of completion and damaging future labour market prospects. For policy-makers, understanding motivations and measuring outcomes is important for designing policies for youth that on one hand provide them with support to complete their studies but, on the other, do not diminish the benefits of work.

This is the first study in Australia to use multivariate analysis to examine motivations and education and employment outcomes from working while studying for both vocational education and training (VET) students (excluding apprentices and trainees) and higher education students aged 25 years and under. It is important to try and eliminate the effects of confounding factors—factors that are related to both working and outcomes—that distort the relationship between outcomes and work while studying. In contrast to descriptive statistics, the use of multivariate analysis allows us to determine whether any observed relationship between hours of work and course completion, for example, is due to hours of work or a third variable, such as socioeconomic background.

We use the 1995 and 1998 cohorts of the Longitudinal Surveys of Australian Youth (LSAY) to undertake this work. LSAY contains detailed individual information on youth, including information on socioeconomic status and past education outcomes (including university entry scores). Another key feature of LSAY is that it tracks the same individuals from the time they are 15 (in 1995 and 1998 for the two cohorts respectively) until they are 25. This longitudinal aspect is important in the context of this study because we examine employment outcomes from combining work and study up to three years after completion. Taking a longer-term view helps give a clearer picture of potential employment benefits, as it is likely that any initial benefits will diminish over time.

Motivations for combining work and study

Consistent with the findings of the Australian House of Representatives Standing Committee on Education and Training (2009), we find that, for those aged 25 and under in their first tertiary course, the socioeconomic status of parents (measured by employment status, job prestige and highest level of education achieved) has very little bearing on the choice of work and study combination. This suggests that students are not motivated by financial need. Instead, we find that receipt of Youth Allowance (means-tested income support for students) and culture are important factors in the choice of work and study combinations. Overseas-born youth are estimated to be ten percentage points less likely to combine work and study (either by enrolling full-time and working part-time or enrolling part-time and working) than Australian-born students.

Similarly, those who receive Youth Allowance are less likely to combine work and study, but the degree of lower participation in work among Youth Allowance recipients depends on whether they are living with their parents or not. For those who live with their parents, receiving Youth Allowance reduces their likelihood of choosing to combine work and study by 20 percentage points, whereas those who do not live at home and receive Youth Allowance are 13 percentage points less likely to combine work and study. The smaller impact of Youth Allowance on the choice to combine work and study for those living away from home is likely to be because these students face higher costs of living than those living at home, which necessitates some work. Those who receive Youth Allowance are also less likely to choose work and study combinations that require a considerable commitment of time in work, such as working more than 16 hours (roughly two days) a week, and studying full-time or working full-time and studying part-time. However, we cannot conclude whether the relationships between Youth Allowance and choice of work and study combinations are causal. It is possible that students who choose more onerous work commitments prefer working longer hours because, for example, they have greater financial commitments and hence forego receiving Youth Allowance.

Compared with higher education students, we find that VET students are eight percentage points less likely to combine work and study. However, those who do are seven percentage points more likely to combine work and part-time study. The preference for part-time study for VET students may be because more of them already have ongoing full-time employment, but it may also be because many have to pay up-front fees.¹

Educational outcomes
After controlling for differences between VET and higher education students, including academic ability, we find that full- and part-time VET students aged 25 and under in their first tertiary course are around ten percentage points more likely to complete than their higher education counterparts.² The higher completion rates among this group of VET students may be due to a number of reasons, including the shorter duration of the courses, differences in the academic demands of the courses and differences in the flexibility and modes of course delivery. In general, the modularised nature of VET means that courses can be better tailored to individual training needs and are delivered in a greater range of modes, especially off-campus delivery modes.

After controlling for differences between those who choose different work and study combinations, including academic ability, course load, courses types and field of study, we find that or those aged 25 and under in their first tertiary course, working while studying can reduce the chances of completing, but it depends on the hours worked. For full-time students, we find that compared with those who do not work while studying, those who work up to eight hours (roughly a day) a week on average while studying are just as likely to complete, while those who work more than eight hours are less likely to complete; that is, those working 8.1 to 16 hours (roughly two days) a week, 16.1 to 24 hours (roughly three days) a week and those working more than 24 hours a week are five percentage points, eight percentage points and 14 percentage points less likely to complete, respectively. For part-time students, due to the small number of observations, the only comparison is between those who work fewer than 32 hours per week (part-time workers) and those who work more than 32 hours (full-time workers).³ We estimate that part-time students who work full-time are around 12 percentage points less likely to complete than those who work fewer than 32 hours per week. From tests performed, we find no evidence that these results are affected by self-selection bias—the presence of unobserved factors that affect both the choice of average hours worked and course completion.

We find that, generally speaking, there are no differences in the ability of full-time VET students and full-time higher education students to manage work and study. However, we find that part-time VET students who work full-time (work more than 32 hours per week on average over their course) are around 15 percentage points more likely to complete than part-time higher education students who work full-time. To complete a qualification part-time while working full-time requires considerable effort and application and the longer duration of higher education courses may make the required commitment more taxing. The relatively long commitment required to obtain a higher education qualification part-time may also mean that employers are less likely to support full-time employees who choose this education pathway.

Importantly, we find that, for both VET and higher education students, the type of work performed while studying has a significant bearing on completion. Full-time students who find a job they would like as a career while studying (around 12% of both VET and higher education students) are estimated to be around four percentage points more likely to complete study than those who work in a job that is not a career job, while the same effect for part-time students is around ten percentage points. A possible explanation is that most of those who find a career job while studying find work in professional jobs, especially in the areas of information technology, engineering, and architecture and building, which tend to require the attainment of a qualification for post-study employment. Therefore, the prospect of converting their jobs to ongoing employment after study may give them an added incentive to complete over those who work in non-career jobs. If this interpretation is correct, this result underlines the importance of creating more opportunities for students to gain experience working in jobs that they would like as a career.⁴

A consistent result for part- and full-time students is that the longer an individual has been in the job, the greater the chance of completion. A possible explanation is that the more established an individual is in the job, the more support they may get from their employer in the form of more flexible working hours or possibly time off work, in the case of full-time employees. Similarly for full-time students, the more years of employment experience, the greater the chance of completion. The importance of work experience may be linked to the development of 'soft skills', such as time management, commitment to completing a task, communication and interpersonal skills and selfesteem, which may help academic performance. Alternatively, the relationship may not be causal, but instead related to uncontrolled differences in the characteristics of students who have and have not a history of working; for example, differences in motivation.

Employment outcomes

Results suggest that employment in the last year of study significantly improves the chances of finding full-time employment in the first year out from study, but that, for higher education students, the magnitude of benefits depends heavily on the nature of the job while studying. Compared with those who were not working in their last year of higher education, those who were casually employed in a career job and those employed in a non-career job are estimated to be 74 percentage points and 25 percentage points more likely to be in employment in their first year out, respectively. For VET students, working in a casual career job and working in a non-career job in the last year of study is associated with a 68-percentage point and a 65-percentage point higher probability of full-time employment, respectively, in the first year out. We find that working in the last year of study also has longer-term benefits for the chances of being in full-time employment, but that these benefits diminish over time.

There are a number of possible explanations for why the initial employment benefits to higher education depend more heavily on the type of work performed. First, employers of higher education graduates may not value general skills developed from working in a non-career job to the same degree as employers of VET graduates. Second, employers of higher education graduates may value general skills highly, but consider course completion as a better measure of these skills than working in non-career jobs while studying. Finally, although they report that they do not want the job as a career, VET students, by comparison with higher education students, may be more likely to derive job-specific skills that are recognised by employers from a non-career job.

A note of caution when interpreting the employment benefits of combining work and study in this report: while the estimated benefits appear large, especially in the initial period, we cannot rule out the possibility that some, if not all, of the estimated benefit is due to uncontrolled factors, such as personality traits, that affect both employment while studying and employment shortly after studying.

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¹ At the time the data were collected, there was no loans scheme (like HECS available to higher education students) for VET students to defer the payment of fees.

² It is important to note that the estimated higher completion rate for VET only applies to the sample under consideration: those 25 and under who are not enrolled in an apprenticeship or traineeship.

³ The few students who study part-time and who do not work are omitted from the study because their number is too small to warrant detailed analysis and their circumstances are likely to be quite different from the typical part-time student.

⁴ Although we control for academic ability in the form of university entry scores (or combined Year 9 numeracy and literacy scores if entry scores are missing), we cannot rule out the possibility that those who find career jobs while studying are better-performing students and who are therefore more likely to complete.