Inconsistent Policy Evaluation: A Case Study for a Large Workfare Program

Evaluations of workfare programs in poor rural economies have typically ignored two features that policy makers stress: involuntary unemployment and the expected welfare losses from work requirements. The paper generalizes past evaluation theory and methods to incorporate both features, and shows that doing so can switch the policy ranking in favor of welfare over workfare. A case study for India’s massive National Rural Employment Guarantee Scheme indicates lower impacts on poverty than suggested by past methods, despite a more “poor-poor” incidence. A basic-income guarantee would dominate net workfare earnings in terms of the impact on poverty for a given budgetary outlay.