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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. Nandy, Amarendu & Tiwari, Chhavi & Kundu, Sayantan, 2021. "India’s Rural Employment Guarantee Scheme – How does it influence seasonal rural out-migration decisions?," Journal of Policy Modeling, Elsevier, vol. 43(6), pages 1181-1203.
    2. Raghunathan, Kalyani & Headey, Derek & Herforth, Anna, 2021. "Affordability of nutritious diets in rural India," Food Policy, Elsevier, vol. 99(C).
    3. C. Justin Cook & Manisha Shah, 2020. "Aggregate Effects from Public Works: Evidence from India," NBER Working Papers 27395, National Bureau of Economic Research, Inc.
    4. Narayan Chandra Nayak & Bimal Kishore Sahoo & Mamata Jenamani & Alok Ranjan Mohanty & Runa Sen Chatterjee, 2021. "Does Convergence of Rural Development Schemes Improve Household Welfare? An Investigation of Mahatma Gandhi National Rural Employment Guarantee Act in Odisha, India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(4), pages 1023-1042, December.

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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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