IDEAS home Printed from https://ideas.repec.org/p/ifs/ifsewp/05-08.html
   My bibliography  Save this paper

Long-term effects of a mandatory multistage program: the New Deal for young people in the UK

Author

Listed:
  • Giacomi De Giorgi

    (Institute for Fiscal Studies and Stanford University)

Abstract

The New Deal For Young People is the major welfare-to-work program in the UK. It is a mandatory multistage policy targeted at the 18-24 year old unemployed. This paper investigates the effectiveness of the program in terms of enhancing the (re)employment probability of participant males. I exploit the eligibility rule to identify a suitable counterfactual relying upon a simple regression discontinuity design. By exploiting such a discontinuity I am able to non parametrically identify (Hahn et al., 2001) a local average treatment effect (LATE). While relying upon the non parametric local linear regression method I am able to push forward such a parameter to a "global" dimension, implicitly adding parametric structure. No evidence of possible general equilibrium as well as substitution effects is found by a co- hort specific approach (before and after the program). The main result is that the program enhances employability by about 6-7%.

Suggested Citation

  • Giacomi De Giorgi, 2005. "Long-term effects of a mandatory multistage program: the New Deal for young people in the UK," IFS Working Papers W05/08, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:05/08
    as

    Download full text from publisher

    File URL: http://www.ifs.org.uk/wps/wp0508.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gerard J. van den Berg & Bas van der Klaauw & Jan C. van Ours, 2004. "Punitive Sanctions and the Transition Rate from Welfare to Work," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 211-241, January.
    2. Lawrence F. Katz, 1996. "Wage Subsidies for the Disadvantaged," NBER Working Papers 5679, National Bureau of Economic Research, Inc.
    3. John Van Reenen, 2004. "Active Labor Market Policies and the British New Deal for the Young Unemployed in Context," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980–2000, pages 461-496, National Bureau of Economic Research, Inc.
    4. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2004. "Evaluating the Employment Impact of a Mandatory Job Search Program," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 569-606, June.
    5. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097, Elsevier.
    6. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2001. "Evaluating the employment impact of a mandatory job search assistance program," IFS Working Papers W01/20, Institute for Fiscal Studies.
    7. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
    8. Jinyong Hahn & Petra Todd & Wilbert Van der Klaauw, 1999. "Evaluating the Effect of an Antidiscrimination Law Using a Regression-Discontinuity Design," NBER Working Papers 7131, National Bureau of Economic Research, Inc.
    9. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-209, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marios Michaelides & Peter R. Mueser & Jeffrey A. Smith, 2021. "Do Reemployment Programs For The Unemployed Work For Youth? Evidence From The Great Recession In The United States," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 162-185, January.
    2. Marios Michaelides & Peter Mueser, 2020. "The Labor Market Effects of US Reemployment Policy: Lessons from an Analysis of Four Programs during the Great Recession," Journal of Labor Economics, University of Chicago Press, vol. 38(4), pages 1099-1140.
    3. Craig Brett & Laurence Jacquet, 2015. "Workforce or workfare? The optimal use of work requirements when labour is supplied along the extensive margin," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(5), pages 1855-1882, December.
    4. Gerard J. van den Berg & Annette H. Bergemann & Marco Caliendo, 2009. "The Effect of Active Labor Market Programs on Not-Yet Treated Unemployed Individuals," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 606-616, 04-05.
    5. Annette Bergemann & Marco Caliendo & Gerard J. van den Berg & Klaus F. Zimmermann, 2011. "The threat effect of participation in active labor market programs on job search behavior of migrants in Germany," International Journal of Manpower, Emerald Group Publishing Limited, vol. 32(7), pages 777-795, October.
    6. Zimmermann, Klaus F. & Biavaschi, Costanza & Eichhorst, Werner & Giulietti, Corrado & Kendzia, Michael J. & Muravyev, Alexander & Pieters, Janneke & Rodríguez-Planas, Núria & Schmidl, Ricarda, 2013. "Youth Unemployment and Vocational Training," Foundations and Trends(R) in Microeconomics, now publishers, vol. 9(1–2), pages 1-157, December.
    7. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
    8. Mike Brewer, 2007. "Welfare reform in the UK: 1997 - 2007," IFS Working Papers W07/20, Institute for Fiscal Studies.
    9. Yingying Dong, 2012. "Regression Discontinuity Applications with Rounding Errors in the Running Variable," Working Papers 111206, University of California-Irvine, Department of Economics.
    10. Dayanand S. Manoli & Marios Michaelides & Ankur Patel, 2018. "Long-Term and Heterogeneous Effects of Job-Search Assistance," NBER Working Papers 24422, National Bureau of Economic Research, Inc.
    11. Duncan McVicar & Jan M. Podivinsky, 2010. "Are Active Labour Market Programmes Least Effective Where They Are Most Needed? The Case of the British New Deal for Young People," Melbourne Institute Working Paper Series wp2010n16, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    12. Gerard J. van den Berg & Antoine Bozio & Mónica Costa Dias, 2020. "Policy discontinuity and duration outcomes," Quantitative Economics, Econometric Society, vol. 11(3), pages 871-916, July.
    13. Bruno Decreuse & Guillaume Wilemme, 2019. "Age Discontinuity and Nonemployment Benefit Policy Evaluation through the Lens of Job Search Theory," Working Papers halshs-02072800, HAL.
    14. Jeff Borland & Yi-Ping Tseng, 2011. "Does 'Work for the Dole' work?: an Australian perspective on work experience programmes," Applied Economics, Taylor & Francis Journals, vol. 43(28), pages 4353-4368.
    15. van den Berg, Gerard J. & Hofmann, Barbara & Stephan, Gesine & Uhlendorff, Arne, 2021. "Mandatory integration agreements for unemployed job seekers: a randomized controlled field experiment in Germany," Working Paper Series 2021:4, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    16. Alexander C. Lembcke, 2014. "The Impact of Mandatory Entitlement to Paid Leave on Employment in the UK," CEP Discussion Papers dp1262, Centre for Economic Performance, LSE.
    17. Mauricio Villamizar‐Villegas & Freddy A. Pinzon‐Puerto & Maria Alejandra Ruiz‐Sanchez, 2022. "A comprehensive history of regression discontinuity designs: An empirical survey of the last 60 years," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1130-1178, September.
    18. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs In Economics," Working Papers 1118, Princeton University, Department of Economics, Industrial Relations Section..
    19. Bruno Crepon & Marc Ferracci & Grégory Jolivet & Gerard Van Den Berg, 2010. "Analyzing the Anticipation of Treatments with Data on Notification Dates," Working Papers 2010-41, Center for Research in Economics and Statistics.
    20. Tanweer Ali, 2011. "The UK future jobs fund: The Labour party's adoption of the job guarantee principle," Working Papers PKWP1106, Post Keynesian Economics Society (PKES).
    21. Crépon, Bruno & Ferracci, Marc & Jolivet, Grégory & van den Berg, Gerard J., 2010. "Analyzing the Anticipation of Treatments Using Data on Notification Dates," IZA Discussion Papers 5265, Institute of Labor Economics (IZA).
    22. Álvaro A. Novo & Mário Centeno, 2006. "The Impact on Unemployment Duration of a Mandatory Job Search Program," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    2. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," IZA Discussion Papers 2018, Institute of Labor Economics (IZA).
    3. John Van Reenen, 2004. "Active Labor Market Policies and the British New Deal for the Young Unemployed in Context," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980–2000, pages 461-496, National Bureau of Economic Research, Inc.
    4. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    5. McGuinness, Seamus & O'Connell, Philip J. & Kelly, Elish & Walsh, John R., 2011. "Activation in Ireland: An Evaluation of the National Employment Action Plan," Research Series, Economic and Social Research Institute (ESRI), number RS20, June.
    6. Sangeeta Pratap & Erwan Quintin, 2001. "Are labor markets segmented in Argentina? a semiparametric approach," Center for Latin America Working Papers 0701, Federal Reserve Bank of Dallas.
    7. Alexander Murray, 2010. "The State of Knowledge on the Role and Impact of Labour Market Information: A Survey of the International Evidence," CSLS Research Reports 2010-05, Centre for the Study of Living Standards.
    8. Erich Battistin & Enrico Rettore, 2003. "Another look at the regression discontinuity design," CeMMAP working papers CWP01/03, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    9. Kluve, Jochen & Fertig, Michael & Jacobi, Lena & Nima, Leonhard & Schaffner, Sandra & Schmidt, Christoph M. & Card, David & Góra, Marek & Jensen, Peter & Leetmaa, Reelika & Patacchini, Eleonora & van , 2005. "Study on the effectiveness of ALMPs: Research project for the European Commission, DG Employment, Social Affairs and Equal Opportunities. Final report," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 69929.
    10. Seamus McGuinness & Philip J. O’Connell & Elish Kelly, 2019. "Carrots, No Stick, No Driver: The Employment Impact of Job Search Assistance in a Regime with Minimal Monitoring and Sanctions," Journal of Labor Research, Springer, vol. 40(2), pages 151-180, June.
    11. Albrecht, James & van den Berg, Gerard J & Vroman, Susan, 2004. "The knowledge lift: The Swedish adult education program that aimed to eliminate low worker skill levels," Working Paper Series 2004:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    12. Ammermüller, Andreas & Zwick, Thomas & Boockmann, Bernhard & Maier, Michael, 2007. "Do hiring subsidies reduce unemployment among the elderly? Evidence from two natural experiments," ZEW Discussion Papers 07-001, ZEW - Leibniz Centre for European Economic Research.
    13. repec:zbw:rwidps:0037 is not listed on IDEAS
    14. Adriana Kugler & Juan F. Jimeno & Virginia Hernanz, "undated". "Employment Consequences of Restrictive Permanent Contracts: Evidence from Spanish Labor Market Reforms," Working Papers 2003-14, FEDEA.
    15. Mergele, Lukas & Weber, Michael, 2020. "Public employment services under decentralization: Evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 182(C).
    16. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2011. "What Can Active Labour Market Policies Do?," Papers EC1, Economic and Social Research Institute (ESRI).
    17. Mauricio Villamizar‐Villegas & Freddy A. Pinzon‐Puerto & Maria Alejandra Ruiz‐Sanchez, 2022. "A comprehensive history of regression discontinuity designs: An empirical survey of the last 60 years," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1130-1178, September.
    18. Graversen, B.K. & van Ours, J.C., 2006. "How to Help Unemployed Find Jobs Quickly : Experimental Evidence from a Mandatory Activation Program," Discussion Paper 2006-126, Tilburg University, Center for Economic Research.
    19. Gerard J. van den Berg & Petyo Bonev & Enno Mammen, 2020. "Nonparametric Instrumental Variable Methods for Dynamic Treatment Evaluation," The Review of Economics and Statistics, MIT Press, vol. 102(2), pages 355-367, May.
    20. Burgert, Derik, 2005. "The Impact of German Job Protection Legislation on Job Creation in Small Establishments - An Application of the Regression Discontinuity Design," MPRA Paper 5971, University Library of Munich, Germany.
    21. Kluve, Jochen, 2006. "The Effectiveness of European Active Labor Market Policy," RWI Discussion Papers 37, RWI - Leibniz-Institut für Wirtschaftsforschung.

    More about this item

    Keywords

    Labour market policy evaluation; regression discontinuity; non parametric;
    All these keywords.

    JEL classification:

    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ifs:ifsewp:05/08. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emma Hyman (email available below). General contact details of provider: https://edirc.repec.org/data/ifsssuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.