Teen Subsidies ‘Discouraged’ Part-Time Work, Impacted Future Earnings, Report Finds

Undated file photo of students sitting an exam. Gareth Fuller/PA Wire

Government cash subsidies aimed at keeping low income teenagers in school did not improve educational attainment and may have impacted their future earning outcomes, a study has found.

The report by the Institute for Fiscal Studies (IFS) published on Wednesday found that the education maintenance allowance (EMA) may have “discouraged” young people from taking part-time jobs while at sixth form or college.

As a result, they were deprived of valuable work experience that would have helped them later when entering the adult job market.

EMAs—which were scrapped in England in 2011— were first piloted by the previous Labour government in 1999 and rolled out across the UK in 2004. It saw 16- to 19-year-olds from low-income backgrounds given £30 a week (or £50 in today’s money) if they stayed in full-time education.

The funds were meant to help teenagers with costs such as travel and other course related expenses and were intended to generate long-term improvements in the outcomes of underprivileged learners.

However researchers behind the study, funded by the Nuffield Foundation, said that while the scheme did increase participation in full-time education, it “failed to achieve its ultimate aims of improving educational attainment and labour market outcomes.”

“In fact, the results suggest that the EMA may even have led to a drop in later-life earnings of up to 3.5% for its most disadvantaged recipients,” the IFS said in a statement.

‘Discouraged’ Part-Time Work

According to researchers, the EMA had reduced young people’s earnings at 17 by around 7 percent.

They believe this is owing to reduced part-time working hours for those who would have remained in full-time education “even in the absence of the EMA.”

“The EMA seems to have discouraged part-time work alongside study,” authors wrote.

They added, “Although one might expect this to benefit students by allowing them more time to focus on their studies, it could also have a negative long-run impact, as part-time work has been shown to boost long-run employment prospects.”

‘No Evidence’ EMA Improved Attainment

The report also said that there was “no evidence” the EMA resulted in a measurable increase in academic attainment.

This is despite the grant requiring young people to attend classes to continue receiving it.

The IFS report concluded, “The EMA did not lead to a measurable increase in attainment.”

Students react after receiving their A-level results at City of London Academy in London on Aug. 17, 2023. Peter Nicholls/Getty Images

It said that despite high uptake among those eligible, “students did not see an improvement in A-level grades or pass rates, or an increase in the probability of receiving a Level 2 or Level 3 vocational qualification.”

“There is also no evidence that the EMA improved educational performance beyond the period of eligibility, with no increase in university attendance,” it added.

Reduced Outcomes in Long-Run

EMAs had also “slightly reduced earnings and employment in the longer run” for recipients.

The IFS estimated that this reduction was around 1 percent every year of their 20s.

They also also find that those who had received EMAs as students were slightly less likely to be in employment and slightly more likely to claim out-of-work benefits as adults.

“These effects were plausibly driven by weaker connections to the labour market due to reduced work experience amongst young adults, as well as by students being diverted from high-return training,” the report said, again highlighting the importance that early work experience provided the teenagers as future employment candidates.

Negative Consequences

Report authors said that by 2010, EMAs cost £900 million a year (in 2024 prices) across the whole UK. It was replaced with a more cost-effective 16 to 19 Bursary Scheme in England in 2011, but EMAs are still available in Scotland, Wales, and Northern Ireland.

Report co-author Nick Ridpath, a research economist at the IFS, said: “The EMA, which cost billions through the 2000s, did not have the hoped-for positive effects on educational outcomes and later employment.

“Indeed, it looks like it may have had negative consequences by discouraging disadvantaged young people from getting work experience.”

Emily Tanner, programme head at the Nuffield Foundation, said that the findings “underscore the scale of the challenge in increasing both participation and meaningful engagement in post-16 education and training.”

“With the Curriculum and Assessment Review underway, there is an opportunity to ensure that 16–19 learning pathways at all levels provide more effective routes into good employment,” she said.

Labour launched the Curriculum and Assessment Review shortly after the July general election and will look into ensuring 16- to 19-year-olds “have access to rigorous and high-value qualifications and training that will give them the skills they need to seize opportunity as well as ensuring they are ready for the changing workplace.”

Since Labour has returned to government, it has pledged to improve education outcomes for disadvantaged children as part of its Plan for Change and has launched strategies to tackle child poverty, “breaking the link between young people’s backgrounds and their future success.”