Side note: Consider upgrading to Blender 2.83 LTS if your hardware fulfills the requirements. The UI was redesigned in the update 2.79/2.80, also some shortcuts have changed. The shortcuts mentioned here are for 2.8+
First, you need to parent the cloth to the rig as you did with the body mesh with Automatic Weights. Then it will deform but there are still some issues.
It has a different, not ideal topology. There are some loose & duplicated verts. The different topology will cause a lack of volume in the shoulders.
You need to fix it (delete one side, fix the verts, and apply a Mirror modifier). Or create it from the scratch. A common technique is to select the faces of the body mesh, duplicate them and separate these faces to a new object. Then scale up the shirt a bit and inflate/widen it. This way the topology fits the body's topology.
Add a Soldify modifier if you like but make sure the Armature modifier is on top of the stack.
Skin is sticking through the cloth
As you can see there is still some skin sticking through the cloth especially when the Subdivision Surface modifier is active and the mesh is deformed by the Armature modifier.
To prevent this you can do manually correct the weight paint and mask out the body mesh with the Mask modifier. Select the faces that you want to hide and assign them to a vertex group. Then add a Mask modifier, specify the vertex group and click the Invert <-> button.
How to fix knee bending
To get a better bending of the knees you need to add a bit more geometry to the legs. If you have a look at the elbows you will notice that they have 2 extra edge loops.
The simplest method to get a better deformation is to add 2 more edge loops. For a better result, you want to give the kneecap more geometry and the back of the knee less so it can compress better. There are several methods to do this. Here are two for a low-poly mesh as your model has:
Variant A: Add two edge loops, create 2 triangles at the sides with the knife tool K and X, Dissolve Edge:
Variant A with Subdivision Surface level 1
Variant B: Similar to A but insect I the front face to add a knee patch.
Variant B with Subdivision Surface level 1