Applied Research Bulletin - Volume 5, Number 1 (Summer 1999)

Previous

Contents

Next

Dropping Out and Working While Studying

Governments are especially interested in measures to curb the school dropout phenomenon, which is not surprising when we consider the importance currently attached to so-called "knowledge-based" jobs. In 1991, some 18 percent of young Canadians aged 20 had already dropped out of secondary school and had not yet obtained their diplomas. It is this factor that lies primarily behind the fact that many young people entering the job market lack the necessary qualifications. It is also generally believed that any policy that can help to cut the dropout rate will be an effective means of improving the youth job market situation. Some of these measures attempt to limit the work done by youth while attending school, as it is often assumed that there is a cause and effect relationship between working and dropping out.

In order to introduce policies to bring about a decline in dropout rates, we have to know exactly what prompts young people to take this route. At Human Resources Development Canada's request, a team of researchers from the Centre for Interuniversity Research and Analysis on Organizations (CIRANO) undertook to analyze the factors influencing the decision to drop out of high school and to work while studying.

To study these issues, the authors used data from the 1991 School Leavers Survey conducted Canada-wide by Statistics Canada in collaboration with Human Resources Development Canada. The national dimension of the survey gave them a better understanding of the roles of macroeconomic and institutional variables in decisions to drop out or work while studying. The survey dealt with young people aged 18 to 20 in 1991 who fell into one of the following three categories: graduate, at school or school leaver. The data from the survey were used to construct an econometric model to explain the determining factors in decisions to drop out of school and to work during the last year of high school. The variables considered included respondents' personal characteristics (sex, learning difficulties, work during education, etc.) and socio-economic profiles (family situation, parents' education, private or public school, etc.), along with various institutional or macroeconomic characteristics serving as environmental variables (legal dropout age, unemployment rate, minimum wage, etc.).

The study's general conclusions are the following:

• Nothing indicates that working ten hours a week or less while continuing to study represents an incentive to drop out; in fact, acquired work experience seems to smooth the job market integration of those who obtain their high school diploma.
• Those working over ten hours a week are more likely to drop out.
• The dropout rate declines when the legal school leaving age is higher.
• An increase in the minimum wage contributes significantly to a higher dropout rate in high school.

Working While Studying Is Not Necessarily an Incentive To Drop Out

Should we, as some have suggested, limit the number of hours worked while still going to school in order to reduce the dropout rate and lessen the negative impact on school marks? The results of the CIRANO study suggest that the answer to this question must be a qualified one. For many students, working ten hours or less a week is not an incentive to drop out, and the work experience acquired while still studying will even sometimes promote the job market integration of students who will obtain their diplomas. Indeed, the odds of dropping out are lower for these students than for the ones who do not work at all during their education. However, students working more than ten hours a week are more likely to drop out.

Dropout Potential by Number of Hours Worked Per Week

Hours Worked Per Week	Dropout Potential (Percentage)
0	5.2
1-10 hours	1.0
11-20 hours	5.1
21-30 hours	6.9
31-40 hours	15.4

Raising the Legal School-Leaving Age Would Result in a Decline in School Dropouts

The econometric results also show that the dropout rate declines when the legal school-leaving age is higher. Since the 1991 School Leavers Survey was done, all Canadian provinces have raised the legal leaving age to 16, and the authors suggest that this age be set even higher, at 17 or even 18, as is the case in some European countries and American states. This measure would bring the legal leaving age into line with the usual age for high school completion — 17 in Quebec and 18 elsewhere in Canada.

Increasing the Minimum Wage Creates Favourable Conditions for a New Rise in the Dropout Rate

The study also highlights the role played by the minimum wage in the decision to drop out. Clearly, the higher the minimum wage, the higher the high school dropout rate. The authors compared the effects of five different minimum hourly wage rates varying from $2.98 (Wage A on the graphic) to $4.65 (Wage E) between 1987 and 1991 in constant 1986 dollars. The results obtained with the model show that the average number of hours worked and the dropout rate rise when there is an increase in the minimum wage.

Note:

Wage A < Wage B. Minimum wages are in constant 1986 dollars

According to the researchers, provincial governments create conditions more favourable for dropping out every time they raise the minimum wage. The first to feel the effects of these increases are students who are predisposed to abandon their education either because they have a lesser appetite for studying or because they are very uncertain about the likelihood of successfully completing their senior year. To avoid this pitfall, the authors suggest the use of two different minimum wage rates, one for those aged 18 (or 17) or more and the other for younger persons.

This study forms part of a research program under the heading of the transition between school and the world of work. The next stage, to be conducted by the CIRANO team, will combine the 1991 School Leavers Survey with the School Leavers Follow-up Survey of 1995 in order to study the school "drop-in" and job market integration phenomena. It will then be possible to track the same individuals over a relatively lengthy period and thus analyze the effects of work experience acquired during school on job market integration and establish whether the returners were able to turn their decision to advantage.

Previous

Contents

Next