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The “Discouraged Worker Effect†in public works programs: Evidence from the MGNREGA in India

Author

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  • Narayanan, Sudha
  • Das, Upasak
  • Liu, Yanyan
  • Barrett, Christopher B.

Abstract

This study investigates the consequences of poor implementation in public workfare programs, focusing on the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in India. Using nationally representative data, we test empirically for a discouraged worker effect arising from either of two mechanisms: administrative rationing of jobs among those who seek work and delays in wage payments. We find strong evidence at the household and district levels that administrative rationing discourages subsequent demand for work. Delayed wage payments seem to matter significantly during rainfall shocks. We find further that rationing is strongly associated with indicators of implementation ability such as staff capacity. Politics appears to play only a limited role. The findings suggest that assessments of the relevance of public programs over their lifecycle need to factor in implementation quality.

Suggested Citation

  • Narayanan, Sudha & Das, Upasak & Liu, Yanyan & Barrett, Christopher B., 2017. "The “Discouraged Worker Effect†in public works programs: Evidence from the MGNREGA in India," IFPRI discussion papers 1633, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:ifprid:1633
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    References listed on IDEAS

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    4. 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.
    5. Parantap Basu & Kunal Sen, 2015. "Welfare Implications of the Indian Employment Guarantee Programme with a Wage Payment Delay," CEGAP Working Papers 2015_01, Durham University Business School.
    6. Harou, Aurélie & Liu, Yanyan & Barrett, Christopher B. & You, Liangzhi, 2014. "Variable returns to fertilizer use and its relationship to poverty: Experimental and simulation evidence from Malawi:," IFPRI discussion papers 1373, International Food Policy Research Institute (IFPRI).
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    8. Benati, Luca, 2001. "Some empirical evidence on the 'discouraged worker' effect," Economics Letters, Elsevier, vol. 70(3), pages 387-395, March.
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    More about this item

    Keywords

    wages; labor; social protection; social safety net; Mahatma Gandhi National Rural Employment Guarantee Scheme; administrative rationing; discouraged worker effect; employment guarantee; J08 Labor Economics Policies; J38 Wages; Compensation; and Labor Costs: Public Policy;

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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