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Discouraged worker effect in public works programs: Evidence from the MGNREGA in India

Listed author(s):
  • Sudha Narayanan

    ()

    (Indira Gandhi Institute of Development Research)

  • Upasak Das

    (Centre for Development Studies)

  • Yanyan Liu

    (International Food Policy Research Institute)

  • Christopher B. Barrett

    (Cornell University)

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.

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File URL: http://www.igidr.ac.in/pdf/publication/WP-2016-027.pdf
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Paper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2016-027.

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Length: 67 pages
Date of creation: Nov 2016
Handle: RePEc:ind:igiwpp:2016-027
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  1. Emmanuel Skoufias, 1994. "Using Shadow Wages to Estimate Labor Supply of Agricultural Households," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(2), pages 215-227.
  2. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
  3. K. Subbarao, 1997. "Public Works as an Anti-Poverty Program: An Overview of Cross-Country Experience," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 678-683.
  4. Shylashri Shankar & Raghav Gaiha & Raghbendra Jha, 2011. "Information, Access and Targeting: The National Rural Employment Guarantee Scheme in India," Oxford Development Studies, Taylor & Francis Journals, vol. 39(1), pages 69-95.
  5. 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).
  6. Dilip Mookherjee & Pranab K. Bardhan, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May.
  7. Benati, Luca, 2001. "Some empirical evidence on the 'discouraged worker' effect," Economics Letters, Elsevier, vol. 70(3), pages 387-395, March.
  8. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
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