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Workfare and Human Capital Investment: Evidence from India

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  • Manisha Shah
  • Bryce Millett Steinberg

Abstract

We examine the effect of India's National Rural Employment Guarantee Scheme (NREGS), one of the largest workfare programs in the world, on human capital investment. Since NREGS increases labor demand, it could increase the opportunity cost of schooling, lowering human capital investment even as incomes increase. We exploit the staged rollout of the program across districts for causal identification. Using a household survey of test scores and schooling outcomes for approximately 2.5 million rural children in India, we show that each year of exposure to NREGS decreases school enrollment by 2 percentage points and math scores by 2% of a standard deviation amongst children aged 13-16. In addition, while the impacts of NREGS on human capital are similar for boys and girls, adolescent boys are primarily substituting into market work when they leave school while adolescent girls are substituting into unpaid domestic work. We find mixed results for younger children. We conclude that anti-poverty programs which raise wages could have the unintended effect of lowering human capital investment.

Suggested Citation

  • Manisha Shah & Bryce Millett Steinberg, 2015. "Workfare and Human Capital Investment: Evidence from India," NBER Working Papers 21543, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21543
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    Cited by:

    1. Adukia, Anjali & Asher, Samuel & Novosad, Paul, 2017. "Educational Investment Responses to Economic Opportunity: Evidence from Indian Road Construction," MPRA Paper 80194, University Library of Munich, Germany.
    2. repec:eee:wdevel:v:107:y:2018:i:c:p:111-124 is not listed on IDEAS
    3. Favara, Marta & Porter, Catherine & Woldehanna, Tassew, 2017. "Smarter through Social Protection? Evaluating the Impact of Ethiopia's Safety-Net on Child Cognitive Abilities," IZA Discussion Papers 10972, Institute for the Study of Labor (IZA).
    4. Xu, Kun & Guan, Zhihua & Xu, Wenli, 2015. "省级财政支出效率空间溢出效应研究:基于超效率dea和gsm模型
      [Study on Spatial Spillover Effect of Provincial Fiscal Efficiency: Based on Super-Efficient DEA and GSM Model]
      ," MPRA Paper 71132, University Library of Munich, Germany.
    5. Manisha Shah & Bryce Millett Steinberg, 2017. "Drought of Opportunities: Contemporaneous and Long-Term Impacts of Rainfall Shocks on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 125(2), pages 527-561.
    6. Raphaël Franck & Stelios Michalopoulos, 2017. "Emigration during the French Revolution: Consequences in the Short and Longue Durée," NBER Working Papers 23936, National Bureau of Economic Research, Inc.
    7. Margherita Calderone, 2017. "Are there different spillover effects from cash transfers to men and women? Impacts on investments in education in post-war Uganda," WIDER Working Paper Series 093, World Institute for Development Economic Research (UNU-WIDER).
    8. Karthik Muralidharan & Paul Niehaus & Sandip Sukhtankar, 2017. "General Equilibrium Effects of (Improving) Public Employment Programs: Experimental Evidence from India," NBER Working Papers 23838, National Bureau of Economic Research, Inc.
    9. Merfeld, Joshua D, 2017. "Spatially Heterogeneous Effects of a Public Works Program," MPRA Paper 80630, University Library of Munich, Germany.
    10. Nava Ashraf & Edward Glaeser & Abraham Holland & Bryce Millett Steinberg, 2017. "Water, Health and Wealth," NBER Working Papers 23807, National Bureau of Economic Research, Inc.
    11. Andrew D. Foster & Esther Gehrke, 2017. "Consumption Risk and Human Capital Accumulation in India," NBER Working Papers 24041, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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