An economist is warning a welfare change that would see thousands of youths lose access to unemployment benefits, would bring significant long-term impacts.From November 2026, the government will end Jobseeker payments to 18-19-year-olds whose parents earn more than $67,225, after the bill passed into law under urgency on Friday.In October last year, it was estimated that about 4300 young people would become ineligible for support as a result.Economist Shamubeel Eaqub told Midday Report the costs far outweigh the benefits and any savings would be a transfer from the poor to the crown.Economist Shamubeel EaqubScreengrab / Facebook"We know that these are young people who are currently really struggling. So to even qualify for benefit, there are huge amounts of threshold."He said the benefit system already had "significant hurdles" and the policy was "mean-spirited".Eaqub explained while there may be benefits in the short term, there were negative long-term consequences."All the evidence says that when you discourage people or you take away resources from young people at this very difficult time, there is scarring that their life outcomes in terms of employment outcomes in the future will be worse.Social Development and Employment Minister Louise Upston said the legislation reflected the government's commitment to reduce benefit dependency and encourage people into work."This legislation reinforces the expectation that young people who are not in employment, education or training should be financially supported by their parents, not by taxpayers through the welfare system," she said."New Zealanders deserve a welfare system that is firm, fair and simple."However, Eaqub said there were already known issues with the policy around mental health and health service use, and increased risk of using emergency and transitional housing.In extreme cases Eaqub said there was the potential for increase in the justice or corrections burden."This policy essentially says, if we kick you off, you're going to have more jobs. What job?... Which vacancy are they going to get?"The latest Stats NZ figures put New Zealand's unemployment rate 5.6 percent for the June 2026 quarter, a near 11-year high.Eaquab had serious concerns the policy was done under urgency without a full cost benefit analysis and did not follow good process under the Regulatory Standards Act.He said his own Illustrative cost benefit analysis showed the policy could mean the loss of millions of dollars in the long term."The costs outweigh the benefits by $156 million over the course of the next 20 years."If you include the well-being benefits, the mental health pressures and the well-being of young people and their families and communities, it's in the order of half a billion dollars negative."He said the policy also created a "bizarre situation" where young people were no longer seen as adults in context of the welfare system.But Upston said the changes would "better target that support to those who need it most"."Importantly, it does not apply to homeowners who are receiving New Zealand superannuation, veteran's pension, supported living payment, or the emergency benefit that is the equivalent to the supported living payment," she said."The partner or spouse of a recipient of one of those benefits will also not be impacted by the change."