Improving DWP assessment of the relative costs and benefits of employment programmes

This report has been produced with the primary aim of informing cost benefit estimates within the Cost-Benefit Framework (CBF). The Department for Work and Pensions CBF is a guidance document for the production of cost-benefit information. The research consisted of two components: a literature review and new empirical estimates from DWP administrative data. The following areas were covered in the literature review: general equilibrium effects; subgroup impacts and distribution of impacts; impacts on duration of benefits and employment, and wages; multiple participation in programmes or other interventions. This report reviews what is known about these topics and discusses when they are likely to be important, with recommended actions in the context of the CBF net impact analyses and cost-benefit analyses. For general equilibrium effects, estimates from the literature are presented and recommendations are made for to account for these effects in cost-benefit analyses. These estimates can be used to guide sensitivity tests. For duration of benefits and employment, the analysis of the DWP administrative data provides empirical estimates of gross duration of benefits and employment, and annual nominal taxable HMRC earnings. These estimates have been produced for a range of New Deal programmes.