IDEAS home Printed from https://ideas.repec.org/p/qeh/ophiwp/ophiwp129.html
   My bibliography  Save this paper

The Welfare Effects of India's Rural Employment Guarantee

Author

Listed:
  • Stefan Klonner, Christian Oldiges

Abstract

We examine the welfare effects of India's workfare program NREGA using a novel, almost sharp regression discontinuity design. We find large seasonal consumption increases in states implementing the program intensely, which are a multiple of the direct income gains. We also find increases in adolescents' school attendance. Our results imply substantial general equilibrium effects. We conclude that, when properly implemented, the public employment program holds significant potential for reducing poverty and insuring households against various adverse implications of seasonal income shortfalls.

Suggested Citation

  • Stefan Klonner, Christian Oldiges, 2019. "The Welfare Effects of India's Rural Employment Guarantee," OPHI Working Papers 129, Queen Elizabeth House, University of Oxford.
    • Handle: RePEc:qeh:ophiwp:ophiwp129
    as

    Download full text from publisher

    File URL: https://ophi.org.uk/the-welfare-effects-of-indias-rural-employment-guarantee/
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Paul Niehaus & Sandip Sukhtankar, 2013. "Corruption Dynamics: The Golden Goose Effect," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 230-269, November.
    2. Khanna, Gaurav & Zimmermann, Laura, 2017. "Guns and butter? Fighting violence with the promise of development," Journal of Development Economics, Elsevier, vol. 124(C), pages 120-141.
    3. Joshua D Merfeld, 2020. "Moving Up or Just Surviving? Nonfarm Self‐Employment in India," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 32-53, January.
    4. Sebastian Calonico & Matias D. Cattaneo & Rocio Titiunik, 2014. "Robust Nonparametric Confidence Intervals for Regression‐Discontinuity Designs," Econometrica, Econometric Society, vol. 82, pages 2295-2326, November.
    5. Hanan G. Jacoby & Emmanuel Skoufias, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(3), pages 311-335.
    6. Gehrke, Esther & Hartwig, Renate, 2018. "Productive effects of public works programs: What do we know? What should we know?," World Development, Elsevier, vol. 107(C), pages 111-124.
    7. Karthik Muralidharan & Paul Niehaus & Sandip Sukhtankar, 2016. "Building State Capacity: Evidence from Biometric Smartcards in India," American Economic Review, American Economic Association, vol. 106(10), pages 2895-2929, October.
    8. Manisha Shah & Bryce Millett Steinberg, 2021. "Workfare and Human Capital Investment: Evidence from India," Journal of Human Resources, University of Wisconsin Press, vol. 56(2), pages 380-405.
    9. Gupta, Bhanu & Mukhopadhyay, Abhiroop, 2016. "Local funds and political competition: Evidence from the National Rural Employment Guarantee Scheme in India," European Journal of Political Economy, Elsevier, vol. 41(C), pages 14-30.
    10. Thiemo Fetzer, 2020. "Can Workfare Programs Moderate Conflict? Evidence from India," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 3337-3375.
    11. Clément Imbert & John Papp, 2015. "Labor Market Effects of Social Programs: Evidence from India's Employment Guarantee," American Economic Journal: Applied Economics, American Economic Association, vol. 7(2), pages 233-263, April.
    12. Berg, Erlend & Bhattacharyya, Sambit & Rajasekhar, D. & Manjula, R., 2018. "Can public works increase equilibrium wages? Evidence from India’s National Rural Employment Guarantee," World Development, Elsevier, vol. 103(C), pages 239-254.
    13. Abhijit Banerjee & Esther Duflo & Clément Imbert & Santhosh Mathew & Rohini Pande, 2020. "E-governance, Accountability, and Leakage in Public Programs: Experimental Evidence from a Financial Management Reform in India," American Economic Journal: Applied Economics, American Economic Association, vol. 12(4), pages 39-72, October.
    14. Niehaus, Paul & Sukhtankar, Sandip, 2013. "The marginal rate of corruption in public programs: Evidence from India," Journal of Public Economics, Elsevier, vol. 104(C), pages 52-64.
    15. Dasgupta, Aditya & Gawande, Kishore & Kapur, Devesh, 2017. "(When) Do Antipoverty Programs Reduce Violence? India's Rural Employment Guarantee and Maoist Conflict," International Organization, Cambridge University Press, vol. 71(3), pages 605-632, July.
    16. Karthik Muralidharan & Paul Niehaus & Sandip Sukhtankar, 2023. "General Equilibrium Effects of (Improving) Public Employment Programs: Experimental Evidence From India," Econometrica, Econometric Society, vol. 91(4), pages 1261-1295, July.
    17. Andrew D. Foster & Esther Gehrke, 2017. "Start What You Finish! Ex Ante Risk and Schooling Investments in the Presence of Dynamic Complementarities," NBER Working Papers 24041, National Bureau of Economic Research, Inc.
    18. Esther Gehrke, 2019. "An Employment Guarantee as Risk Insurance? Assessing the Effects of the NREGS on Agricultural Production Decisions," The World Bank Economic Review, World Bank, vol. 33(2), pages 413-435.
    19. Joseph P. Kaboski & Robert M. Townsend, 2012. "The Impact of Credit on Village Economies," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 98-133, April.
    20. Deininger, Klaus & Liu, Yanyan, 2019. "Heterogeneous welfare impacts of National Rural Employment Guarantee Scheme: Evidence from Andhra Pradesh, India," World Development, Elsevier, vol. 117(C), pages 98-111.
    21. World Bank, 2020. "World Development Report 2020," World Bank Publications - Books, The World Bank Group, number 32437, December.
    22. Subbarao,Kalanidhi, 2003. "Systemic shocks and social protection : role and effectiveness of public works programs," Policy Research Working Paper Series 25606, The World Bank.
    23. Angus Deaton & Valerie Kozel, 2005. "Data and Dogma: The Great Indian Poverty Debate," The World Bank Research Observer, World Bank, vol. 20(2), pages 177-199.
    24. Bose, Nayana, 2017. "Raising Consumption Through India’s National Rural Employment Guarantee Scheme," World Development, Elsevier, vol. 96(C), pages 245-263.
    25. World Bank, 2011. "Social Protection for a Changing India : Executive Summary," World Bank Publications - Reports 2746, The World Bank Group.
    26. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
    27. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, vol. 82(1), pages 249-261, March.
    28. Merfeld, Joshua D., 2019. "Spatially heterogeneous effects of a public works program," Journal of Development Economics, Elsevier, vol. 136(C), pages 151-167.
    29. Ravallion, Martin & Datt, Gaurav & Chaudhuri, Shubham, 1993. "Does Maharashtra's Employment Guarantee Scheme Guarantee Employment? Effects of the 1988 Wage Increase," Economic Development and Cultural Change, University of Chicago Press, vol. 41(2), pages 251-275, January.
    30. Subha Mani & Jere R. Behrman & Sheikh Galab & Prudhvikar Reddy, 2020. "Impact of the NREGS on Children’s Intellectual Human Capital," Journal of Development Studies, Taylor & Francis Journals, vol. 56(5), pages 929-945, May.
    31. Khera, Reetika (ed.), 2011. "The Battle for Employment Guarantee," OUP Catalogue, Oxford University Press, number 9780198070627.
    32. Ravi, Shamika & Engler, Monika, 2015. "Workfare as an Effective Way to Fight Poverty: The Case of India’s NREGS," World Development, Elsevier, vol. 67(C), pages 57-71.
    33. Park, Albert & Wang, Sangui & Wu, Guobao, 2002. "Regional poverty targeting in China," Journal of Public Economics, Elsevier, vol. 86(1), pages 123-153, October.
    34. Ari Hyytinen & Jaakko Meriläinen & Tuukka Saarimaa & Otto Toivanen & Janne Tukiainen, 2018. "When does regression discontinuity design work? Evidence from random election outcomes," Quantitative Economics, Econometric Society, vol. 9(2), pages 1019-1051, July.
    35. Radhika Lal & Steve Miller & Maikel Lieuw-Kie-Song & Daniel Kostzer, 2010. "Public Works and Employment Programmes: Towards a Long-Term Development Approach," Working Papers 66, International Policy Centre for Inclusive Growth.
    36. World Bank, 2011. "Social Protection for a Changing India : Main Report," World Bank Publications - Reports 2745, The World Bank Group.
    37. Subbarao, Kalanidhi, 2003. "Systemic shocks and social protection : role and effectiveness of public works programs," Social Protection and Labor Policy and Technical Notes 25606, The World Bank.
    38. Farzana Afridi & Abhiroop Mukhopadhyay & Soham Sahoo, 2016. "Female labor force participation and child education in India: evidence from the National Rural Employment Guarantee Scheme," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-27, December.
    39. Drèze, Jean & Khera, Reetika, 2017. "Recent Social Security Initiatives in India," World Development, Elsevier, vol. 98(C), pages 555-572.
    40. Sonalde Desai & Prem Vashishtha & Omkar Joshi, 2015. "Mahatma Gandhi National Rural Employment Guarantee Act: A Catalyst for Rural Transformation," Working Papers id:7259, eSocialSciences.
    41. Gulzar, Saad & Pasquale, Benjamin J., 2017. "Politicians, Bureaucrats, and Development: Evidence from India," American Political Science Review, Cambridge University Press, vol. 111(1), pages 162-183, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Karthik Muralidharan & Paul Niehaus & Sandip Sukhtankar, 2023. "General Equilibrium Effects of (Improving) Public Employment Programs: Experimental Evidence From India," Econometrica, Econometric Society, vol. 91(4), pages 1261-1295, July.
    2. Deininger, Klaus & Liu, Yanyan, 2019. "Heterogeneous welfare impacts of National Rural Employment Guarantee Scheme: Evidence from Andhra Pradesh, India," World Development, Elsevier, vol. 117(C), pages 98-111.
    3. Berg, Erlend & Bhattacharyya, Sambit & Rajasekhar, D. & Manjula, R., 2018. "Can public works increase equilibrium wages? Evidence from India’s National Rural Employment Guarantee," World Development, Elsevier, vol. 103(C), pages 239-254.
    4. Fetzer, Thiemo, 2019. "Can Workfare Programs Moderate Conflict? Evidence from India," The Warwick Economics Research Paper Series (TWERPS) 1220, University of Warwick, Department of Economics.
    5. Thiemo Fetzer, 2020. "Can Workfare Programs Moderate Conflict? Evidence from India," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 3337-3375.
    6. Parmar, Divya & Banerjee, Aneesh, 2019. "Impact of an employment guarantee scheme on utilisation of maternal healthcare services: Results from a natural experiment in India," Social Science & Medicine, Elsevier, vol. 222(C), pages 285-293.
    7. Deininger, Klaus & Nagarajan, Hari K & Singh, Sudhir K, 2020. "Women's political leadership and economic empowerment: Evidence from public works in India," Journal of Comparative Economics, Elsevier, vol. 48(2), pages 277-291.
    8. Jules Gazeaud & Victor Stephane, 2023. "Productive Workfare? Evidence from Ethiopia's Productive Safety Net Program," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(1), pages 265-290, January.
    9. Ankush Goyal & Rajender Kumar, 2022. "Does Social Welfare Programmes Influence Households Trust in Local Administration and Their Political Participation? Evidence from the MGNREG Scheme in India," Indian Journal of Human Development, , vol. 16(3), pages 602-617, December.
    10. Chatterjee, Jagori & Merfeld, Joshua D., 2021. "Protecting girls from droughts with social safety nets," World Development, Elsevier, vol. 147(C).
    11. Bahal, Girish & Shrivastava, Anand, 2021. "Supply variabilities in public workfares," Journal of Development Economics, Elsevier, vol. 150(C).
    12. Chatterjee, Jagori & Merfeld, Joshua D., 2020. "Protecting Girls from Droughts with Social Safety Nets," IZA Discussion Papers 13694, Institute of Labor Economics (IZA).
    13. Sarma, Nayantara, 2022. "Domestic violence and workfare: An evaluation of India’s MGNREGS," World Development, Elsevier, vol. 149(C).
    14. Klonner, Stefan & Oldiges , Christian, 2014. "Safety Net for India's Poor or Waste of Public Funds? Poverty and Welfare in the Wake of the World's Largest Job Guarantee Program," Working Papers 0564, University of Heidelberg, Department of Economics.
    15. Merfeld, Joshua D., 2019. "Spatially heterogeneous effects of a public works program," Journal of Development Economics, Elsevier, vol. 136(C), pages 151-167.
    16. Vis Taraz, 2023. "Public works programmes and agricultural risk: Evidence from India," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(2), pages 198-223, April.
    17. Merfeld, Joshua D, 2017. "Spatially Heterogeneous Effects of a Public Works Program," MPRA Paper 80630, University Library of Munich, Germany.
    18. Gehrke, Esther & Hartwig, Renate, 2018. "Productive effects of public works programs: What do we know? What should we know?," World Development, Elsevier, vol. 107(C), pages 111-124.
    19. Bagga,Aanchal & Holmlund,Marcus Erik & Khan,Nausheen & Subha,Mani & Mvukiyehe,Eric & Premand,Patrick, 2023. "Do Public Works Programs Have Sustained Impacts ? A Review of Experimental Studies from LMICs," Policy Research Working Paper Series 10471, The World Bank.
    20. Sheahan, Megan & Liu, Yanyan & Narayanan, Sudha & Barrett, Christopher B., 2015. "Disaggregated labor supply implications of guaranteed employment in India," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 237345, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qeh:ophiwp:ophiwp129. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: IT Support (email available below). General contact details of provider: https://edirc.repec.org/data/qehoxuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.