IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v115y2019icp209-221.html
   My bibliography  Save this article

Guaranteed employment or guaranteed income?

Author

Listed:
  • Ravallion, Martin

Abstract

The paper critically reviews the arguments for and against both employment guarantees and income guarantees when viewed as rights-based policy instruments for poverty reduction in a developing economy. Decentralized implementation of the right-to-work poses serious challenges in poor places. Evidence on India’s National Rural Employment Guarantee Act does not suggest that the potential for either providing work when needed or reducing current poverty is realized, despite pro-poor targeting. Instead, work is often rationed by local leaders, and the poverty impact is small when all the costs are considered. The option of income support using cash transfers also has both pros and cons. Widely-used methods for finely targeting cash transfers tend to miss many poor people, and can discourage those reached from earning extra income. Yet it cannot be presumed that switching to a universal basic income will reduce poverty more than workfare or finely-targeted transfers. That is an empirical question and the answer will undoubtedly vary across settings, belying the generalizations often heard from advocates. Nonetheless, more incentive-neutral, universal and/or state-contingent transfer schemes merit consideration in settings in which existing public spending is skewed against poor people and/or there is scope for raising taxes on the rich.

Suggested Citation

  • Ravallion, Martin, 2019. "Guaranteed employment or guaranteed income?," World Development, Elsevier, vol. 115(C), pages 209-221.
  • Handle: RePEc:eee:wdevel:v:115:y:2019:i:c:p:209-221
    DOI: 10.1016/j.worlddev.2018.11.013
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X18304194
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.worlddev.2018.11.013?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
    2. 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.
    3. Jalan, Jyotsna & Ravallion, Martin, 2001. "Behavioral responses to risk in rural China," Journal of Development Economics, Elsevier, vol. 66(1), pages 23-49, October.
    4. Martin Ravallion & Gaurav Datt, 1995. "Is Targeting Through a Work Requirement Efficient? Some Evidence for Rural India," Monash Economics Working Papers archive-41, Monash University, Department of Economics.
    5. Jha, Raghbendra & Gaiha, Raghav & Pandey, Manoj K., 2012. "Net transfer benefits under India's rural employment guarantee scheme," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 296-311.
    6. Victoria Hosegood & Anne Case & Cally Ardington, 2009. "Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 22-48, January.
    7. Brown, Caitlin & Ravallion, Martin & van de Walle, Dominique, 2018. "A poor means test? Econometric targeting in Africa," Journal of Development Economics, Elsevier, vol. 134(C), pages 109-124.
    8. Alik-Lagrange, Arthur & Ravallion, Martin, 2018. "Workfare versus transfers in rural India," World Development, Elsevier, vol. 112(C), pages 244-258.
    9. Ravallion, Martin & van de Walle, Dominique & Dutta, Puja & Murgai, Rinku, 2015. "Empowering poor people through public information? Lessons from a movie in rural India," Journal of Public Economics, Elsevier, vol. 132(C), pages 13-22.
    10. Ravallion, Martin & Chen, Shaohua, 2015. "Benefit incidence with incentive effects, measurement errors and latent heterogeneity: A case study for China," Journal of Public Economics, Elsevier, vol. 128(C), pages 124-132.
    11. James Browne & Herwig Immervoll, 2017. "Mechanics of replacing benefit systems with a basic income: comparative results from a microsimulation approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(4), pages 325-344, December.
    12. Chen, Shaohua & Mu, Ren & Ravallion, Martin, 2009. "Are there lasting impacts of aid to poor areas?," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 512-528, April.
    13. Ministry of Finance, Government of India,, 2017. "Economic Survey 2016-17," OUP Catalogue, Oxford University Press, edition 2, number 9780199477661.
    14. 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.
    15. Martin Ravallion, 2016. "Are the world’s poorest being left behind?," Journal of Economic Growth, Springer, vol. 21(2), pages 139-164, June.
    16. Vivi Alatas & Abhijit Banerjee & Rema Hanna & Benjamin A. Olken & Julia Tobias, 2012. "Targeting the Poor: Evidence from a Field Experiment in Indonesia," American Economic Review, American Economic Association, vol. 102(4), pages 1206-1240, June.
    17. Walker, Robert, 2014. "The Shame of Poverty," OUP Catalogue, Oxford University Press, number 9780199684823.
    18. John Gibson & Geua Boe-Gibson & Halahingano Rohorua & David McKenzie, 2007. "Efficient remittance services for development in the Pacific," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 14(2), pages 55-74, December.
    19. repec:oup:qjecon:v:129:y:2014:i:2:p:697-752. is not listed on IDEAS
    20. Jalan, Jyotsna & Ravallion, Martin, 2003. "Estimating the Benefit Incidence of an Antipoverty Program by Propensity-Score Matching," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(1), pages 19-30, January.
    21. Ioana Marinescu, 2018. "No Strings Attached: The Behavioral Effects of U.S. Unconditional Cash Transfer Programs," NBER Working Papers 24337, National Bureau of Economic Research, Inc.
    22. Deepa Narayan & Lant Pritchett & Soumya Kapoor, 2009. "Moving Out of Poverty : Volume 2. Success from the Bottom Up," World Bank Publications, The World Bank, number 11838.
    23. 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.
    24. 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.
    25. Caitlin Brown & Martin Ravallion & Dominique van de Walle, 2019. "Most of Africa's Nutritionally Deprived Women and Children are Not Found in Poor Households," The Review of Economics and Statistics, MIT Press, vol. 101(4), pages 631-644, October.
    26. van de Walle, Dominique, 1998. "Targeting Revisited," World Bank Research Observer, World Bank Group, vol. 13(2), pages 231-248, August.
    27. 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.
    28. World Bank, 2011. "Poverty and Social Exclusion in India," World Bank Publications, The World Bank, number 2289.
    29. Ravallion, Martin, 2016. "The Economics of Poverty: History, Measurement, and Policy," OUP Catalogue, Oxford University Press, number 9780190212773.
    30. Ravallion, Martin, 1999. "Appraising Workfare," World Bank Research Observer, World Bank Group, vol. 14(1), pages 31-48, February.
    31. Rinku Murgai & Martin Ravallion & Dominique van de Walle, 2016. "Is Workfare Cost-effective against Poverty in a Poor Labor-Surplus Economy?," World Bank Economic Review, World Bank Group, vol. 30(3), pages 413-445.
    32. Christopher Blattman & Nathan Fiala & Sebastian Martinez, 2014. "Generating Skilled Self-Employment in Developing Countries: Experimental Evidence from Uganda," The Quarterly Journal of Economics, Oxford University Press, vol. 129(2), pages 697-752.
    33. Peter M. Solar, 1995. "Poor relief and English economic development before the industrial revolution," Economic History Review, Economic History Society, vol. 48(1), pages 1-22, February.
    34. William Jack & Adam Ray & Tavneet Suri, 2013. "Transaction Networks: Evidence from Mobile Money in Kenya," American Economic Review, American Economic Association, vol. 103(3), pages 356-361, May.
    35. Puja Dutta & Rinku Murgai & Martin Ravallion & Dominique van de Walle, 2014. "Right to Work? Assessing India's Employment Guarantee Scheme in Bihar," World Bank Publications, The World Bank, number 17195.
    36. Christopher Blattman & Nathan Fiala & Sebastian Martinez, 2018. "The Long Term Impacts of Grants on Poverty: 9-year Evidence From Uganda's Youth Opportunities Program," NBER Working Papers 24999, National Bureau of Economic Research, Inc.
    37. Joakim Palme & Walter Korpi, 1998. "The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality and Poverty in the Western Countries," LIS Working papers 174, LIS Cross-National Data Center in Luxembourg.
    38. Martin Ravallion, 2017. "Inequality and Poverty When Effort Matters," Econometrics, MDPI, Open Access Journal, vol. 5(4), pages 1-19, November.
    39. De Donder, Philippe & Hindriks, Jean, 1998. "The Political Economy of Targeting," Public Choice, Springer, vol. 95(1-2), pages 177-200, April.
    40. Arthur Alik-Lagrange & Martin Ravallion, 2016. "Social Frictions to Knowledge Diffusion: Evidence from an Information Intervention," NBER Working Papers 21877, National Bureau of Economic Research, Inc.
    41. Martin Ravallion & Emanuela Galasso & Teodoro Lazo & Ernesto Philipp, 2005. "What Can Ex-Participants Reveal about a Program’s Impact?," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
    42. Carlo del Ninno & Bradford Mills, 2015. "Safety Nets in Africa : Effective Mechanisms to Reach the Poor and Most Vulnerable [Les filets sociaux en Afrique]," World Bank Publications, The World Bank, number 21369.
    43. Kanbur, Ravi & Keen, Michael & Tuomala, Matti, 1994. "Labor Supply and Targeting in Poverty Alleviation Programs," World Bank Economic Review, World Bank Group, vol. 8(2), pages 191-211, May.
    44. Jonah B. Gelbach & Lant H. Pritchett, 2000. "Indicator targeting in a political economy: Leakier can be better," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 4(2), pages 113-145.
    45. Johannes Haushofer & Jeremy Shapiro, 2016. "The Short-term Impact of Unconditional Cash Transfers to the Poor: ExperimentalEvidence from Kenya," The Quarterly Journal of Economics, Oxford University Press, vol. 131(4), pages 1973-2042.
    46. Sonalde Desai & Prem Vashishtha & Omkar Joshi, 2015. "Mahatma Gandhi National Rural Employment Guarantee Act: A Catalyst for Rural Transformation," Working Papers id:7259, eSocialSciences.
    47. Abhijit V. Banerjee & Rema Hanna & Gabriel E. Kreindler & Benjamin A. Olken, 2017. "Debunking the Stereotype of the Lazy Welfare Recipient: Evidence from Cash Transfer Programs," World Bank Research Observer, World Bank Group, vol. 32(2), pages 155-184.
    48. Dutta, Puja & Murgai, Rinku & Ravallion., Martin & van de Walle, Dominique, 2012. "Does India's employment guarantee scheme guarantee employment ?," Policy Research Working Paper Series 6003, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jules Gazeaud & Victor Stephane, 2020. "Productive Workfare? Evidence from Ethiopia’s Productive Safety Net Program," Working Papers 2037, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    2. Coady, David & Prady, Delphine, 2019. "Universal income in developing countries: Issues, options, and illustration for India," World Development Perspectives, Elsevier, vol. 16(C).
    3. Dhingra, Swati & Machin, Stephen, 2020. "The Crisis and Job Guarantees in Urban India," IZA Discussion Papers 13760, Institute of Labor Economics (IZA).
    4. Fouksman, E. & Klein, E., 2019. "Radical transformation or technological intervention? Two paths for universal basic income," World Development, Elsevier, vol. 122(C), pages 492-500.
    5. Sehnbruch, Kirsten & Carranza, Rafael & Contreras, Dante, 2020. "Unemployment insurance in Chile: lessons from a high inequality developing country," LSE Research Online Documents on Economics 107824, London School of Economics and Political Science, LSE Library.

    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. Alik-Lagrange, Arthur & Ravallion, Martin, 2018. "Workfare versus transfers in rural India," World Development, Elsevier, vol. 112(C), pages 244-258.
    2. Martin Ravallion, 2019. "Is a Decentralized Right-to-Work Policy Feasible?," NBER Working Papers 25687, National Bureau of Economic Research, Inc.
    3. Margitic, Juan & Ravallion, Martin, 2019. "Lifting the floor? Economic development, social protection and the developing World's poorest," Journal of Development Economics, Elsevier, vol. 139(C), pages 97-108.
    4. Martin Ravallion, 2013. "The Idea of Antipoverty Policy," NBER Working Papers 19210, National Bureau of Economic Research, Inc.
    5. Martin Ravallion, 2021. "On the Gains from Tradeable Benefits-in-Kind," Working Papers gueconwpa~21-21-13, Georgetown University, Department of Economics.
    6. Beegle, Kathleen & Galasso, Emanuela & Goldberg, Jessica, 2017. "Direct and indirect effects of Malawi's public works program on food security," Journal of Development Economics, Elsevier, vol. 128(C), pages 1-23.
    7. Drèze, Jean & Khera, Reetika, 2017. "Recent Social Security Initiatives in India," World Development, Elsevier, vol. 98(C), pages 555-572.
    8. Rinku Murgai & Martin Ravallion & Dominique van de Walle, 2016. "Is Workfare Cost-effective against Poverty in a Poor Labor-Surplus Economy?," World Bank Economic Review, World Bank Group, vol. 30(3), pages 413-445.
    9. Jules Gazeaud & Victor Stephane, 2020. "Productive Workfare? Evidence from Ethiopia’s Productive Safety Net Program," Working Papers 2037, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    10. Brown, Caitlin & Ravallion, Martin & van de Walle, Dominique, 2018. "A poor means test? Econometric targeting in Africa," Journal of Development Economics, Elsevier, vol. 134(C), pages 109-124.
    11. Ravallion, Martin, 2003. "Targeted transfers in poor countries : revisiting the tradeoffs and policy options," Policy Research Working Paper Series 3048, The World Bank.
    12. 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.
    13. 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.
    14. 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.
    15. 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.
    16. Deininger,Klaus W. & Nagarajan,Hari Krishnan & Singh,Sudhir K. & Deininger,Klaus W. & Nagarajan,Hari Krishnan & Singh,Sudhir K., 2016. "Short-term effects of India's employment guarantee program on labor markets and agricultural productivity," Policy Research Working Paper Series 7665, The World Bank.
    17. Arthur Alik-Lagrange & Martin Ravallion, 2016. "Social Frictions to Knowledge Diffusion: Evidence from an Information Intervention," NBER Working Papers 21877, National Bureau of Economic Research, Inc.
    18. Kartik Misra, 2019. "No Employment without Participation : An Evaluation of India's Employment Program in Eastern Uttar Pradesh," UMASS Amherst Economics Working Papers 2019-13, University of Massachusetts Amherst, Department of Economics.
    19. Jayne, Thomas S. & Strauss, John & Yamano, Takashi & Molla, Daniel, 2002. "Targeting of food aid in rural Ethiopia: chronic need or inertia?," Journal of Development Economics, Elsevier, vol. 68(2), pages 247-288, August.
    20. Abhijit Banerjee & Paul Niehaus & Tavneet Suri, 2019. "Universal Basic Income in the Developing World," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 959-983, August.

    More about this item

    Keywords

    Poverty; Right to work; Workfare; Targeting; Transfers; Universal basic income;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    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:eee:wdevel:v:115:y:2019:i:c:p:209-221. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/worlddev .

    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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/worlddev .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.