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Spatially Heterogeneous Effects of a Public Works Program

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  • Merfeld, Joshua D
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    Most research on labor market effects of the Mahatma Gandhi National Rural Employment Guarantee Scheme focuses on outcomes at the district level. This paper shows that such a focus masks substantial spatial heterogeneity: treated villages located near untreated areas see smaller increases in casual wages than treated villages located farther from untreated areas. I argue that worker mobility, rather than spatial differences in implementation or program leakages, drives this spatial heterogeneity. I also present evidence that the effects of the program on private-sector employment display similar intra-district heterogeneity. Finally, by exploiting the difference in wage changes over space, I show that a large portion of consumption increases are driven by wage increases, not program employment. Overall, these results suggest that a district-level focus underestimates the true effect of the program on wages and also support the argument that increasing rural wages is an effective poverty-fighting tool in developing countries.

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    File URL: https://mpra.ub.uni-muenchen.de/80630/1/MPRA_paper_80630.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 80630.

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    Date of creation: 2017
    Handle: RePEc:pra:mprapa:80630
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    26. repec:eee:deveco:v:128:y:2017:i:c:p:1-23 is not listed on IDEAS
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