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A cost-benefit analysis of the random assignment UK Employment Retention and Advancement Demonstration

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Abstract:

This article presents a cost-benefit analysis of Britain’s Employment Retention and Advancement (ERA) demonstration, which was evaluated through the first large-scale randomized control trial in the UK. ERA used a combination of job coaching and financial incentives in attempting to help long-term unemployed men and low-income lone parents sustain employment and progress in work once they were employed. Using both administrative and survey data, ERA’s effects on benefits and costs were estimated through impact analyses, which exploited the experimental design. The findings indicated that ERA was cost beneficial for long-term unemployed adult men, but not for lone parents. The key findings appear robust to sensitivity tests. Uncertainty, as implied by the SEs of the estimated impacts, was addressed through a Monte Carlo analysis, an approach seldom previously used in cost-benefit analyses of social programs.

Keywords: C93; D61; H43; I38; J29; Monte Carlo analysis; cost-benefit analysis; low-income workers; post-employment assistance; random assignment field experiment

Document Type: Research Article

DOI: https://doi.org/10.1080/00036846.2013.776664

Affiliations: 1: Department of Economics, University of Maryland, Baltimore County, Baltimore, MD, USA 2: MDRC, New York, NY, USA 3: Policy Studies Institute, London, UK

Publication date: 2013-11-01

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