They also save money in court time and the cost of custody as well as proving more effective in helping victims deal with their ordeal.
Compiled by human rights group Justice and the charity The Police Foundation for the Nuffield Foundation's Independent Commission on Youth Crime, the report also calls for an end to children and young people appearing in adult courts.
Under its proposals, restorative youth conferences would deal with cases where the young person has admitted the offence. Youth courts would be retained to deal with contested cases and serious cases that are currently held in the crown court.
Sally Ireland, Justice's director of criminal justice policy, said: "Restorative conferences, which have been so successful in Northern Ireland and around the world, offer the best chance to change behaviour in young offenders and improve the confidence of victims and wider public in the youth justice system.
"We believe that it is time for the government to act on the evidence and make this change as part of its intended reforms to sentencing."