Welfare to Work Policy: the use of
evidence and analysis
Jonathan Portes
Director, Children and Poverty/Chief Economist
Department of Work and Pensions
Impact of analysis at a number of
levels
• Theory
• Programme philosophy and approach
• Programme evaluation
Theoretical framework
• Modified neoclassical – based on the
NAIRU
• Unemployment/inactivity is a supply-side
phenomenon (given stable demand)
• Essentially all adults are potentially in
labour force
And you need theory..
• Your only weapon against anecdote..
• The lump of labour fallacy never dies..
A8 Migrants and unemployment
Rationale for active labour market
policies
• Incentives – hence compulsory jobsearch
• Capital constraints – hence training
• Information failures – hence guidance, signposting
Does it work? Yes…
• Incentives – hence compulsory jobsearch. Works for
mainstream JSA clients.
• Capital constraints – hence training. Not cost-effective
in the UK (WBLA)
• Information failures – hence guidance, signposting.
Very successful for inactive clients (NDLP, PtW).
NDYP impact: time on benefit
Control group
NDYP group
Difference
Difference
preNDYP
(1)
(2)
(1) – (2) = (3)
(4)
(5)
Year 1
59.6%
52.0%
7.6%
1.1%
6.6%
Year 2
35.9%
31.6%
4.3%
-0.2%
4.5%
Year 3
27.9%
25.6%
2.3%
-1.6%
3.9%
Year 4
23.4%
22.3%
1.1%
-1.6%
2.7%
Overall
36.7%
32.9%
3.8%
-0.6%
4.4%
Net
impact
NDLP: Impact analysis
• Employment rate increased by nearly 10%
• Analysis suggests about half of this due to policy
action
• NDLP cost-benefit analysis suggests (short-run)
benefits twice costs