Children that grow up surrounded by poverty often remain in poverty even into adulthood. To try to break this cycle, governments and nonprofit institutions have developed a broad range of policies and interventions. One such program is the Pathway to Education program that offers disadvantaged youth in Grades 9 through 12 free public transportation and postsecondary financial aid in exchange for commitments to regularly meet with an advisor, access tutoring assistance, and attend character-building group events.
Programs like Pathway appear effective at improving education attainment, but cost thousands of dollars per student. To justify these costs, it is necessary to consider long-term benefits. What policy makers are ultimately concerned with is return on investment in improving lifetime outcomes, such as earnings, in order to break the cycle of poverty. With the possibility that short-run impacts on academic outcomes may not easily translate to significant long-term impacts, the ability for comprehensive programs to improve long-run outcomes is an open question.
A recent IZA Discussion Paper by Adam M. Lavecchia, Philip Oreopoulos and Robert S. Brown delivers encouraging evidence that comprehensive student support programs can indeed lead to meaningful, long-run labor market benefits, including higher employment rates and earnings and a reduced reliance on social assistance.
Student support program in one of Toronto’s poorest community
The Pathway program started at Regent Park, Canada’s oldest and largest public housing project and one of the poorest communities in Toronto. Eligibility is based solely on the place of residence; for example, at its Regent Park site, only students living in the neighborhood’s public housing units are eligible for the program. Participation in the program, although voluntary, is extremely high, often in excess of 85-90 percent.
The research design compares the outcomes of individuals that were assigned to live in Regent Park during high school with students that were assigned to other Toronto public housing projects. To estimate long-term labor market outcomes, the authors matched high school administrative records to income tax records.
Increases in annual earnings and employment
The researchers find that eligibility for Pathways increases annual earnings at age 28 by approximately $3,100 or 19 percent. Eligibility for Pathways is also found to have a large positive impact on the fraction of disadvantaged youth that are employed as adults, by 15 percent, and postsecondary educational attainment. In addition, the program decreases the likelihood of receiving social assistance by more than a third.
The study is the first to estimate impacts of comprehensive support programs for high school students on earnings. It also adds to a growing body of evidence that interventions like Pathways have the potential to improve labor market outcomes and reduce reliance on social assistance more than a decade after students participate in the program. An important question remains around whether watered-down versions of these programs could generate similar effects for less cost, or whether programs like that work even better when delivered together with college level programs.