NCPA - National Center for Policy Analysis

"New Deal" for Unemployed British Youths

March 26, 2003

In January 1998, Britain implemented the "New Deal for Young People," an array of changes in the United Kingdom's benefit programs for unemployed youths.

  • After six months of unemployment, 18-to-24 year olds are mandated to enter a "Gateway" period where they are given extensive job search assistance.
  • If they are unable to obtain an unsubsidized job, they can enter one of four New Deal options -- a subsidized job ("employers' option"), full-time education and training, government public service jobs("environmental task force") or volunteer work.

Using either the age-related eligibility criteria and/or comparing areas where pilot programs were implemented and areas where they were not suggests that there has been a significant increase in youths moving to employment due to the New Deal.

  • Unemployed young men are now about 20 percent more likely to get jobs as a result of the policy.
  • The stock of youth employment is about 17,000 higher than it would be without the New Deal.
  • Much of this effect is likely due to the take up of the employer wage subsidy, but at least a fifth of the effect is due to enhanced job search.

Researchers conclude that the social benefits of the New Deal outweigh the costs.

Source: John Michael Van Reenen (Center for Economic Policy Research), "Active Labor Market Policies and the British New Deal for the Young Unemployed in Context," NBER Working Paper No. W9576, March 2003, National Bureau of Economic Research.


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