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Does the employment guarantee scheme stabilize household incomes in rural India?

Author

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  • Pasquale Scandizzo
  • Raghav Gaiha
  • Katsushi Imai

Abstract

Our analysis, based on the ICRISAT panel survey of villages in the semi-arid region of south India, confirms the income stabilizing effect of the Employment Guarantee Scheme in India. Variability of household income is measured by an unconditional variance of residuals of an income equation. A (variant) of Heckman's sample selection model is employed to allow for the endogeneity of EGS participation and to assess its income stabilizing role. The (instrumented) EGS participation reduces the residual variance of household income, implying consequent income stabilization.

Suggested Citation

  • Pasquale Scandizzo & Raghav Gaiha & Katsushi Imai, 2009. "Does the employment guarantee scheme stabilize household incomes in rural India?," Applied Economics Letters, Taylor & Francis Journals, vol. 16(12), pages 1221-1225.
    • Handle: RePEc:taf:apeclt:v:16:y:2009:i:12:p:1221-1225
    DOI: 10.1080/13504850701367262
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    1. Datt, Gaurav & Ravallion, Martin, 1994. "Transfer Benefits from Public-Works Employment: Evidence for Rural India," Economic Journal, Royal Economic Society, vol. 104(427), pages 1346-1369, November.
    2. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    3. Vivek Ghosal & Prakash Loungani, 2000. "The Differential Impact of Uncertainty on Investment in Small and Large Businesses," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 338-343, May.
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    1. Laura Camfield, 2014. "Growing Up in Ethiopia and Andhra Pradesh: The Impact of Social Protection Schemes on Girls’ Roles and Responsibilities," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 26(1), pages 107-123, January.
    2. Subhasish Dey & Katsushi S. Imai, 2014. "Workfare as "Collateral": The Case of the National Rural Employment Guarantee Scheme (NREGS) in India," Economics Discussion Paper Series 1412, Economics, The University of Manchester.
    3. Raghbendra Jha & Hari K. Nagarajan & Kailash C. Pradhan, 2011. "Bribing to Circumvent Capture and Facilitate Participation in Social Programs: Evidence from Indian Villages," ASARC Working Papers 2011-13, The Australian National University, Australia South Asia Research Centre.

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