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Is Workfare Cost-effective against Poverty in a Poor Labor-Surplus Economy?

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  • Rinku Murgai
  • Martin Ravallion
  • Dominique van de Walle

Abstract

Workfare has often seemed an attractive option for making self-targeted transfers to poor people. But is this incentive argument strong enough in practice to prefer unproductive workfare to even untargeted cash transfers? A nonparametric survey-based method is used to assess the cost-effectiveness of a large workfare scheme in a poor state of India with high unemployment. Forgone earnings are evident but fall short of market wages. For the same budget, unproductive workfare has less impact on poverty than either a basic-income scheme or transfers tied to the government's assignment of ration cards. The productivity of workfare is thus crucial to its justification as an antipoverty policy.

Suggested Citation

  • Rinku Murgai & Martin Ravallion & Dominique van de Walle, 2016. "Is Workfare Cost-effective against Poverty in a Poor Labor-Surplus Economy?," The World Bank Economic Review, World Bank, vol. 30(3), pages 413-445.
    • Handle: RePEc:oup:wbecrv:v:30:y:2016:i:3:p:413-445.
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    Cited by:

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    3. Ravallion, Martin, 2019. "Guaranteed employment or guaranteed income?," World Development, Elsevier, vol. 115(C), pages 209-221.
    4. Borga, Liyousew G. & D’Ambrosio, Conchita, 2021. "Social protection and multidimensional poverty: Lessons from Ethiopia, India and Peru," World Development, Elsevier, vol. 147(C).
    5. McKenzie, David, 2016. "Can Business Owners Form Accurate Counterfactuals? Eliciting Treatment and Control Beliefs about Their Outcomes in the Alternat," CEPR Discussion Papers 11280, C.E.P.R. Discussion Papers.
    6. Do, Quy-Toan & Levchenko, Andrei A., 2017. "Trade policy and redistribution when preferences are non-homothetic," Economics Letters, Elsevier, vol. 155(C), pages 92-95.
    7. Abhijit Banerjee, 2016. "Policies for a better-fed world," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 3-17, February.
    8. 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.
    9. Alik-Lagrange, Arthur & Ravallion, Martin, 2018. "Workfare versus transfers in rural India," World Development, Elsevier, vol. 112(C), pages 244-258.
    10. Howie, Peter & Davletova, Indira & Makhazhan, Indira, 2023. "Evaluating the design and implementation of Kazakhstan’s workfare program," Evaluation and Program Planning, Elsevier, vol. 99(C).
    11. World Bank, 2014. "More Jobs, Better Jobs : A Priority for Egypt," World Bank Publications - Reports 20584, The World Bank Group.
    12. Martin Ravallion, 2021. "On the Gains from Tradeable Benefits-in-Kind," Working Papers gueconwpa~21-21-13, Georgetown University, Department of Economics.
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    14. Michael Lokshin & Martin Ravallion, 2022. "A market for work permits," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 37(111), pages 471-499.
    15. Alik-Lagrange, Arthur & Buehren, Niklas & Goldstein, Markus & Hoogeveen, Johannes, 2023. "Welfare impacts of public works in fragile and conflict affected economies: The Londö public works in the Central African Republic," Labour Economics, Elsevier, vol. 81(C).

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    More about this item

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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