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


  • Giacomi De Giorgi

    () (Institute for Fiscal Studies and Stanford University)


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

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    References listed on IDEAS

    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.
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    Cited by:

    1. 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, vol. 32(7), pages 777-795, October.
    2. 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.
    3. Mike Brewer, 2007. "Welfare reform in the UK: 1997 - 2007," IFS Working Papers W07/20, Institute for Fiscal Studies.
    4. 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.
    5. 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 for the Study of Labor (IZA).
    6. Mário Centeno & Álvaro A. Novo, 2006. "The Impact on Unemployment Duration of a Mandatory Job Search Program," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.

    More about this item


    Labour market policy evaluation; regression discontinuity; non parametric;

    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

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