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Why Guarantee Employment? Evidence from a Large Indian Public-Works Program

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  • Zimmermann, Laura

Abstract

Most countries around the world implement some form of a safety net program for poor households. A widespread concern is that such programs crowd out private-sector jobs. But they could also improve workers' welfare by allowing them to take on more risk, for example through self-employment. This paper analyzes the employment impacts of the world's largest public-works program using a novel regression-discontinuity design. The analysis exploits detailed institutional information to describe the allocation formula of the program and to construct a benefit calculator that predicts early and late treatment of districts. The results show that there is little evidence of a crowding out of private-sector jobs. Instead, the scheme functions as a safety net after a bad rainfall shock. Male workers also take on more risk by moving into family employment. This self-revealed preference for a different type of job suggests other potential benefits of safety net programs which so far have received little attention in the literature.

Suggested Citation

  • Zimmermann, Laura, 2020. "Why Guarantee Employment? Evidence from a Large Indian Public-Works Program," GLO Discussion Paper Series 504, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:504
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    Cited by:

    1. C. Justin Cook & Manisha Shah, 2020. "Aggregate Effects from Public Works: Evidence from India," NBER Working Papers 27395, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    public-works program; anti-poverty program; National Rural Employment Guarantee Scheme; NREGA; NREGS; India; regression discontinuity design; safety net; crowding out; risk coping; risk mitigation; insurance;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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