Financial Support and Student Labor Force Participation in Post-Soviet Latvia

Kenneth Smith (Millersville University),  Daunis Auers (University of Latvia), and Toms Rostoks (University of Latvia)

Several studies indicate student employment has a significant impact on student academic performance.  Thus it is important to understand motivations for student employment and labor force participation.  Several studies – primarily from the U.S. – indicate that the availability of financial aid and parental support play an important role in student employment.  Using data gathered from Latvian law and social science students at various Latvian institutions of higher education, we examine determinants of labor force participation.  Latvia is an interesting case study as higher education is quickly evolving in the post-Soviet era.  Unlike much of Europe, private higher education began to grow rapidly in transition and many “public” institutions charge relatively high tuition.  Further, financial aid is rapidly evolving in Latvia with a young student loan program emerging.  Results suggest that student financial support has a significant effect on labor market activity.  Our findings also indicate that the type of support is important in determining student labor market outcomes including whether a student is active in the labor market and whether or not the student is employed or unemployed.  As opposed to most studies of student labor, our data allow examination of unemployment as well as employment.  An interesting finding is that unemployment appears to have an effect on academic performance comparable to part-time work.

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