HOW WELL HAS THE NEW DEAL FOR YOUNG PEOPLE WORKED IN THE UK REGIONS?
| Published date | 01 May 2009 |
| DOI | http://doi.org/10.1111/j.1467-9485.2009.00479.x |
| Author | Jan M. Podivinsky,Duncan McVicar |
| Date | 01 May 2009 |
HOW WELL HAS THE NEW DEAL FOR
YOUNG PEOPLE WORKED IN THE
UK REGIONS?
Duncan McVicar
n
and Jan M. Podivinsky
nn
Abstract
The UK New Deal for Young People (NDYP) is a mandatory active labour market
programme aimed at helping unemployed young people into jobs. This paper
examines how the programme affected hazard rates for unemployment exits across
the UK regions in its first few years. The regional focus is motivated by the belief
that differencesbetween regional labour markets,between claimants, and differences
in implementation may have led to differences in programme outcomes. The paper
shows that NDYP increased outflows from unemployment in all regions but that its
impact was larger in some regions than in others. The paper also shows differential
NDYP impacts across the regions on destination-specific hazard rates from
unemployment to employment, to education/training, to inactivity and to ‘other’.
Possible explanations for these results are then discussed.
I Intro ductio n
The New Deal for Young People (NDYP) – a major active labour market pro-
gramme (ALMP) for young people aged 18–24 years – was introduced across
the United Kingdom in 1998. The programme aims to tackle long-term youth
unemployment, initially by providing 4 months of extra job search assistance
for those unemployed and claiming benefits for 6 months or more, and then, for
those still unemployed, by providing training or work placement activities
intended to improve employability. Participation is mandatory and is backed up
by benefits sanctions.
This paper examines the impact of the NDYP in its first few years on
the duration of unemployment spells for young people, and on their destination
on leaving unemployment, across the UK regions. The regional focus is
motivated by the belief that regional differences in labour markets, in claimant
characteristics and in implementation may lead to regional differences in
programme outcomes. This may in turn suggest region-specific policy responses
for the Scottish, Welsh and Northern Ireland Executives, for the Greater
n
Queen’s University Belfast
nn
University of Southampton
Scottish Journal of Political Economy, Vol. 56, No. 2, May 2009
r2009 The Authors
Journal compilation r2009 Scottish Economic Society. Published by Blackwell Publishing Ltd,
9600 Garsington Road, Oxford, OX4 2DQ, UK and 350 Main St, Malden, MA, 02148, USA
167
London Authority, and for the English Regional Development Agencies. While
there are a number of existing evaluations of NDYP for individual regions (e.g.
Bonjour et al., 2002, for Scotland), no existing studies have evaluated NDYP at
the regional level across the United Kingdom. Neither have national level
studies looked for spatially varying estimates of NDYP impacts (e.g. Riley and
Young, 2001; Blundell et al., 2004; McVicar and Podivinsky, 2008a). This is also
the case for much of the wider welfare reform evaluation literature (e.g. see the
reviews of Heckman et al., 1999; Martin, 2000; Blank, 2002).
In addition to examining how NDYP affected hazard rates for exiting
unemployment across the regions, we also examine how NDYP affected the
competing risks hazard rates for different types of exit from unemployment: job
entry, exits to education or trainingplaces, exits to inactivity and a catchall ‘other
exits’ category.Previous national level evaluations of NDYP have tended to focus
on exits from unemployment without distinguishing between destinations, or on
job entry with all other exits at best treated as an aggregate non-employment
category. McVicarand Podivinsky (2008a) is an exception, showing that not only
has NDYP increased the hazard rate for job entry but also that it has increased
the hazard rate for all other categories of exit, including exits to inactivity. Here
we explore the extent to which these national level impacts on competing risks
hazards are reflected equally across all the UK regions.
The remainder of the paper is set out as follows. After a brief description
of NDYP in the following section, Section III discusses possible mechanisms for
differential regional NDYP impacts. Section IV discusses the data and empirical
methodology. Section V presents and discusses the estimation results and
Section VI concludes.
II The NDYP
Following the introduction of NDYP, a young person aged 18–24 years that has
been unemployed and claiming JSA for 6 months must report for an interview
with a personal advisor or face benefit sanctions. There follows a period of
individually tailored job search support and monitoring called Gateway, which is
intended to last up to 4 months, but sometimes lasts longer. If at the end of that
time the young person is still unemployed, a compulsory New Deal Option must
be taken up. These include full-time education or training places, temporary
subsidised employment placements, placements in the voluntary sector or on the
environmental taskforce (community-based work experience). Options usually
last for up to 6 months (12 months for education and training) and young people
on an option are counted as having left the unemployment register. If, after
completing an option, a young person is still without a job, they enter a follow-
through stage with 3 months of further assistance and monitoring of job search,
and go back on the unemployment register. At all times during participation in
the programme young people are encouraged to take up unsubsidised jobs.
There is a considerable international literature on ALMPs and their evalua-
tion. Heckman et al. (1999), Martin (2000) and Blank (2002) provide recent
reviews, highlighting among other things the variation in estimated programme
DUNCAN MCVICAR AND JAN M. PODIVINSKY168
r2009 The Authors
Journal compilation r2009 Scottish Economic Society
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