AEA RC T Registr y

The American Economic Association's registry for randomized controlled trials

Operated by the British government's Department for Work and Pensions (DWP), UK ERA directed services toward individuals in three distinct low-income groups known to have difficulty retaining a job or advancing to better positions:

-- The NDLP group: Unemployed lone parents receiving Income Support and volunteering for the New Deal for Lone Parents welfare-to-work programme;
-- The WTC group: Lone parents working part time and receiving Working Tax Credit, which supplements the wages of low-paid workers;
-- The ND25+ group: Long-term unemployed people, mostly men, aged 25 or older receiving Jobseeker's Allowance and who were required to participate in the New Deal 25 Plus welfare-to-work programme designed for that harder-to-assist population.

The program offered a combination of services and financial incentives that lasted for as long as two years after participants entered work.

-- Under UK ERA, new employment specialists, called Advancement Support Advisers, worked with job developers to offer participants ongoing advice and assistance intended to help them overcome obstacles to steady employment and find pathways toward better job opportunities and wage progression. The advisers referred participants who wished to enhance their skills while employed to occupational training organizations. Participants who needed extra help to address personal problems that were hindering their success in the labor market were referred to social service agencies.

-- The financial incentives included a retention bonus for participants who remained stably employed in full-time work. It was paid three times per year in increments of about $600, up to a maximum total award of $3,600. Participants who combined training with employment were eligible to receive a training bonus and tuition assistance, each up to about $1,500.

2003-10-01

2007-10-31

The impact study examined service receipt, employment, earnings, benefits receipt. A process study studied the implementation of the program, and a cost-benefit study examined the net present value of the program, assessing gains and losses from three perspectives: those of the participants, the Exchequer, and society as a whole (the first two perspectives combined).

UK ERA was implemented during 2003-2007 in six regions of the country (four in England, and one each in Scotland and Wales) within Jobcentre Plus agencies, the institutions that run Britain's benefit and employment services systems. The evaluation used a random assignment research design in which the experiences of low-income adults who participated in UK ERA programs were compared with those of low-income adults who received services available under existing public programs.

ERA's post-employment phase was voluntary for all target groups. However, the pre-employment New Deal phase was compulsory for the ND25+ group and voluntary for the NDLP group, in accordance with regular New Deal policies. When individuals came into Jobcentre Plus offices, their basic demographic information was recorded and they were informed of the possible advantages of participating in the ERA programme. They were then invited to enter the demonstration 'lottery,' told that they had a 50 percent chance of being selected for the programme, and asked to sign an informed consent form in which they agreed to allow researchers access to certain types of data about them, whether they were assigned to the ERA programme group or to the control group.

Drawing on an extensive body of qualitative data, administrative records, client and staff surveys, and fiscal information, researchers analyzed the implementation, impacts, and costs and benefits of UK ERA in each district.

computer algorithm

individual

No

16,384 individuals

16,384 individuals (6,787 NDLP; 2,815 WTC; 6,782 ND25+)

8,204 ERA, 8,180 control

NDLP: 3,365 ERA, 3,422 control
WTC: 1,415 ERA, 1,400 control
ND25+: 3,424 ERA, 3,358 control

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 labour market. Launched in 2003 in selected Jobcentre Plus offices, ERA targeted three groups: (1) unemployed lone parents receiving Income Support and volunteering for the New Deal for Lone Parents welfare-to-work programme, (2) lone parents working part time and receiving Working Tax Credit, and (3) long-term unemployed people aged 25 or older receiving Jobseeker'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.

Hendra, Richard, James A. Riccio, Richard Dorsett, David H. Greenberg, Genevieve Knight, Joan Phillips, Philip K. Robins, Sandra Vegeris, and Johanna Walter. 2011. Breaking the Low-Pay, No-Pay Cycle: Final Evidence from the UK Employment Retention and Advancement (ERA) Demonstration. London, UK: Department for Work and Pensions.