Working During School and Academic Performance
Unique new data from a college with a mandatory work-study program are used to examine the relationship between working during school and academic performance. Particular attention is paid to the importance of biases that are potentially present because the number of hours that are worked is endogenously chosen by the individual. A “naive” OLS regression, which indicates that a positive and statistically significant relationship exists between hours-worked and grade performance, highlights the potential importance of endogeneity bias in this context. Although a fixed effects estimator suggests that working an additional hour has an effect on grades which is quantitatively very close to zero, we suggest that there are likely to exist causes of endogeneity which are not addressed by the fixed effects estimator. Indeed, an instrumental variables approach, which takes advantage of unique institutional details of the work-study program at this school, indicates that working an additional hour has a negative and quantitatively large effect on grade performance at this school. The results suggest that, even if results appear “reasonable,” a researcher should be cautious when drawing policy conclusions about the relationship between hours-worked and a particular outcome of interest unless he/she is confident that potential problems associated with the endogeneity of hours have been adequately addressed.