Cross-country Relationships Between Student Funding Policies and Student Labour

Using data from 27 European countries in the academic years 2005/06, 2010/11, and 2015/16, we investigate the association between student funding policies and student labour during term time - a phenomenon often seen as detrimental for higher education outcomes. Income substitution effects between entitlements to different types of financial aid and labour income can vary depending on national context, including prevailing norms with regard to students' transition to independent adulthood. Thus, we use panel regressions with random effects for countries, controlling for relevant factors like average wages in the economy. We could not reject the null hypothesis of no relationship between student funding policy and the share of students in employment. On the other hand, generosity of student funding, in particular of its non-repayable components, was negatively, albeit weakly, associated with the average hours worked by employed students. We found this pattern to be more prevalent among older and female students, but not among students living with parents or from lower educational backgrounds. Overall, student funding policies explain little cross-country variance in student labour. This could be attributed to students' preference to use public funding as a substitute of parental transfers or a mean for increasing their total income.