An independent evaluation of the first year of the allowance which were trailled in 15 urban and rural areas showed they are encouraging young people to enter FE.
EMAs give young people staying on in full-time education after Year 11 up to pound;40 a week, depending on their parents' income.
Education Secretary David Blunkett said the results were very promising. "Across all the pilot areas the participation gains lie in the range of 3 to 11 percentage points, with apparently greater benefits in the rural areas.
"In the rural pilot area more young males eligible for an allowance stayed in education than in the comparable rural areas without EMAs.
"There s evidence that the 'something for something' approach that underpins them is having a positive effect in encouraging extra effort on the part of students."
The Department for Education and Employment is now testing allownaces across a third of the country and Mr Blunkett said he expected to see a real improvement in exam results in those areas.
The research, conducted by two universities and two research bodies, found that financial reasons were a major factor in people deciding not to continue in post-16 education. Other reasons were poor exam results, a dislike of their previous school, and difficulties in accessing courses or a suitable institution. But the allowance's financial incentives may need to be supplemented by other policies, said the researchers.