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Cash Induces Students to Stay in School, U.K. Study Finds

Programs that pay teenagers to stay in school may be controversial, but here's some evidence from overseas to suggest that they just might work—at least for some students.

A group of British researchers, in a study published in The Journal of Human Resources this month, shares results from a pilot program that offered 16- to 18-year-olds in the United Kingdom payments to stay in school for up to two years past the minimum age of compulsory school attendance. (That's 16 in the U.K. just as it is in most U.S. states.)

The program went national in 2004. But, in 1999, when it first began, it was available only to students in some urban school districts whose family incomes fell below a certain level. The weekly payments, which typically came to 30 to 40 British pounds, were about a third of what students would have earned had they been employed instead, according to the study.

The sums were apparently large enough to entice more students to stay in school, though. School participation rates in the nine experimental districts were 4.5 percentage points higher in the first year of the program than they were in nine demographically similar areas in which no payments were offered. In the second year of the program, participation rates were 6.7 percentage points higher. The bigger the weekly payment, the study also found, the greater was the impact.

The job market in the U.K. was lively at the time, but most of the students were not forsaking employment to pursue their studies, the results showed. Two-thirds of the students were, in the words of the researchers, otherwise "inactive."

It's important to note that this study is not a randomized experiment. It is, however, one of the first studies to suggest that cash-incentive programs could have an impact in a developed country. Most such research to date has been conducted in developing nations, where any sort of economic incentive might be potentially more meaningful.

Could there be implications in this research for U.S. education? It's hard to say, but a different group of researchers is analyzing results now from a similar program in New York City. Opportunity NYC, a privately funded pilot program run out of the mayor's office, offers some of the city's poorest students and their families cash payments for a range of achievements tied to effort. Parents or students could get the rewards, for instance, for getting regular checkups at the doctor's office, attending parent-teacher conferences, taking a full course-load of studies, or graduating from high school. The first report on that program is due out in early 2010, and chances are it will be very widely read.

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