A project analyzed the impact of Youth Credits, a new system for funding youth training. The system was introduced as a pilot project by 10 English/Welsh Training and Enterprise Councils (TECs). Focus was on early school leavers' participation in training and on their achievement of vocational qualifications. Data were obtained from the Youth Cohort Study (YCS), a nationally representative postal survey of age cohorts in England and Wales. The YCS provided before-after data and control group data. The TEC areas in which Youth Credits were first piloted varied widely. On average, they had higher proportions of nonwhite youth, but were, in other respects, representative of England and Wales. Girls' rates of staying in full-time education rose faster in the pilot areas than elsewhere. Youth Credits had no effect on unemployment rates among those who left education. Youth Credits did not increase the total level of training among 16-year-old school leavers but did increase the proportion of training that was employment based and the proportion that was government supported. Youth Credits appeared to have a redistributive effect. They increased participation in government-supported training among young workers with medium or high attainments on the General Certificate of Secondary Education (GCSE), but reduced it among those with no GCSE grades. Government-supported training helped to compensate for inequalities in access to nongovernment training among early school leavers. It was also more likely to lead to vocational qualifications. (YLB)