The macroeconomic impact of the New Deal for Young People

The New Deal for Young People (NDYP) is one of the main components of the UK government's Welfare-to-Work strategy aimed at raising employment and reducing benefit dependency. It combines elements of an active labour market programme with a stricter benefit regime. This paper evaluates its impact on the wider economy, emphasising the importance of the programme's effect on wage pressure, which is identified separately from the impact of the National Minimum Wage introduced around the same time. While the impact of the NDYP on the wider economy appears modest it is associated with an economic gain.