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Breaking the Low-Pay, No-Pay Cycle: Final Evidence from the UK Employment Retention and Advancement (ERA) Demonstration

334 Pages Posted: 13 Oct 2011  

Richard Hendra

MDRC

James A. Riccio

MDRC

Richard Dorsett

National Institute of Economic and Social Research (NIESR)

David H. Greenberg

University of Maryland Baltimore County

Genevieve Knight

Policy Studies Institute (PSI)

Joan Phillips

Policy Studies Institute (PSI)

Philip K. Robins

University of Miami - School of Business Administration - Department of Economics

Sandra Vegeris

Policy Studies Institute (PSI)

Johanna Walter

MDRC

Kathryn Ray

Policy Studies Institute (PSI)

Jared Smith

affiliation not provided to SSRN

Aaron Hill

MDRC

Date Written: October 12, 2011

Abstract

This report presents the final results on the implementation, impacts, costs, and economic benefits of the UK Employment Retention and Advancement (ERA) programme. ERA’s distinctive combination of post-employment advisory support and financial incentives was designed to help low-income individuals who entered work sustain employment and advance in the labor market. Launched in 2003 in selected Jobcentre Plus offices, ERA targeted three groups: unemployed lone parents receiving Income Support and volunteering for the New Deal for Lone Parents welfare-to-work programme, lone parents working part time and receiving Working Tax Credit, and long-term unemployed people aged 25 or older receiving Job seeker’s Allowance who were required to participate in the New Deal 25 Plus welfare-to-work programme. The effectiveness of the programme was evaluated using a random assignment research design.

The evaluation found that ERA produced short-term earnings gains for the two lone parent target groups. The early gains resulted from increases in the proportion of participants who worked full time (at least 30 hours per week). However, these effects generally faded after the programme ended, largely because the control group caught up with the ERA group.

More impressive were the results for the long-term unemployed participants (mostly men) in the New Deal 25 Plus target group. For them, ERA produced modest but sustained increases in employment and substantial and sustained increases in earnings. These positive effects emerged after the first year and were still evident at the end of a five-year follow-up period. The earnings gains were accompanied by lasting reductions in benefits receipt. ERA proved cost-effective for this group from the perspectives of the participants themselves, the Government budget, and society as a whole.

Suggested Citation

Hendra, Richard and Riccio, James A. and Dorsett, Richard and Greenberg, David H. and Knight, Genevieve and Phillips, Joan and Robins, Philip K. and Vegeris, Sandra and Walter, Johanna and Ray, Kathryn and Smith, Jared and Hill, Aaron, Breaking the Low-Pay, No-Pay Cycle: Final Evidence from the UK Employment Retention and Advancement (ERA) Demonstration (October 12, 2011). Available at SSRN: https://ssrn.com/abstract=1943253 or http://dx.doi.org/10.2139/ssrn.1943253

Richard Hendra

MDRC ( email )

19th Floor
16 East 34 Street
New York, NY 10016
United States

James A. Riccio

MDRC ( email )

19th Floor
16 East 34 Street
United States

Richard Dorsett

National Institute of Economic and Social Research (NIESR) ( email )

2 Dean Trench Street
Smith Square
London, SW1P 3HE
United Kingdom

David H. Greenberg (Contact Author)

University of Maryland Baltimore County ( email )

1000 Hilltop Circle
Baltimore, MD 21250
United States
410-455-2167 (Phone)

Genevieve Knight

Policy Studies Institute (PSI) ( email )

London NW1 3SR
United Kingdom

Joan Phillips

Policy Studies Institute (PSI) ( email )

London NW1 3SR
United Kingdom

Philip K. Robins

University of Miami - School of Business Administration - Department of Economics ( email )

P.O. Box 248126
Coral Gables, FL 33124-6550
United States
305-284-5664 (Phone)
305-284-2985 (Fax)

Sandra Vegeris

Policy Studies Institute (PSI) ( email )

London NW1 3SR
United Kingdom

Johanna Walter

MDRC ( email )

19th Floor
16 East 34 Street
New York, NY 10016
United States

Kathryn Ray

Policy Studies Institute (PSI) ( email )

50 Hanson Street
London, W1W 6UP
United Kingdom

Jared Smith

affiliation not provided to SSRN ( email )

Aaron Hill

MDRC ( email )

19th Floor
16 East 34 Street
New York, NY 10016
United States

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