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Short-term effects of India's employment guarantee program on labor markets and agricultural productivity

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  • Deininger,Klaus W.
  • Nagarajan,Hari Krishnan
  • Singh,Sudhir K.
  • Deininger,Klaus W.
  • Nagarajan,Hari Krishnan
  • Singh,Sudhir K.

Abstract

This paper uses a large national household panel from 1999/2000 and 2007/08 to analyze the short-term effects of India's Mahatma Gandhi National Rural Employment Guarantee Scheme on wages, labor supply, agricultural labor use, and productivity. The scheme prompted a 10-point wage increase and higher labor supply to nonagricultural casual work and agricultural self-employment. Program-induced drops in hired labor demand were more than outweighed by more intensive use of family labor, machinery, fertilizer, and diversification to crops with higher risk-return profiles, especially by small farmers. Although the aggregate productivity effects were modest, total employment generated by the program (but not employment in irrigation-related activities) significantly increased productivity, suggesting alleviation of liquidity constraints and implicit insurance provision rather than quality of works undertaken as a main channel for program-induced productivity effects.

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  • Deininger,Klaus W. & Nagarajan,Hari Krishnan & Singh,Sudhir K. & Deininger,Klaus W. & Nagarajan,Hari Krishnan & Singh,Sudhir K., 2016. "Short-term effects of India's employment guarantee program on labor markets and agricultural productivity," Policy Research Working Paper Series 7665, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7665
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    Cited by:

    1. Joshua D Merfeld, 2020. "Moving Up or Just Surviving? Nonfarm Self‐Employment in India," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 32-53, January.
    2. Gehrke, Esther & Hartwig, Renate, 2018. "Productive effects of public works programs: What do we know? What should we know?," World Development, Elsevier, vol. 107(C), pages 111-124.
    3. Jules Gazeaud & Victor Stephane, 2020. "Productive Workfare? Evidence from Ethiopia's Productive Safety Net Program," Working Papers halshs-03082420, HAL.
    4. Rohini Pande & Charity Troyer Moore & Erin K Fletcher, 2017. "Women and Work in India: Descriptive Evidence and a Review of Potential Policies," CID Working Papers 339, Center for International Development at Harvard University.
    5. Tagat, Anirudh, 2020. "Female matters: Impact of a workfare program on intra-household female decision-making in rural India," World Development Perspectives, Elsevier, vol. 20(C).
    6. Deininger, Klaus & Liu, Yanyan, 2019. "Heterogeneous welfare impacts of National Rural Employment Guarantee Scheme: Evidence from Andhra Pradesh, India," World Development, Elsevier, vol. 117(C), pages 98-111.

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    Keywords

    Employment and Unemployment; Labor Markets; Climate Change and Agriculture; Crops and Crop Management Systems; Rural Labor Markets;
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