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Spatially Heterogeneous Effects of a Public Works Program

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  • Merfeld, Joshua D

Abstract

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.

Suggested Citation

  • Merfeld, Joshua D, 2017. "Spatially Heterogeneous Effects of a Public Works Program," MPRA Paper 80630, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:80630
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    References listed on IDEAS

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    More about this item

    Keywords

    India; Public Works; Labor; Wages; Spillovers;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market

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