Workfare and Human Capital Investment: Evidence from India

Manisha Shah () and Bryce Steinberg

No 9486, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We examine the effect of India's National Rural Employment Guarantee Scheme (NREGS), one of the largest workfare programs in the world, on human capital investment. Since NREGS increases labor demand, it could increase the opportunity cost of schooling, lowering human capital investment even as incomes increase. We exploit the staged rollout of the program across districts for causal identification. Using a household survey of test scores and schooling outcomes for approximately 2.5 million rural children in India, we show that each year of exposure to NREGS decreases school enrollment by 2 percentage points and math scores by 2% of a standard deviation amongst children aged 13-16. In addition, while the impacts of NREGS on human capital are similar for boys and girls, adolescent boys are primarily substituting into market work when they leave school while adolescent girls are substituting into unpaid domestic work. We find mixed results for younger children. We conclude that anti-poverty programs which raise wages could have the unintended effect of lowering human capital investment.

Keywords: human capital investment; workfare programs (search for similar items in EconPapers)
JEL-codes: I2 I38 J1 O12 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2015-11
New Economics Papers: this item is included in nep-dev and nep-edu
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

Published - published in: Journal of Human Resources, 2021, 56 (2) 380-405;

Downloads: (external link)
https://docs.iza.org/dp9486.pdf (application/pdf)

Related works:
Journal Article: Workfare and Human Capital Investment: Evidence from India (2021)
Working Paper: Workfare and Human Capital Investment: Evidence from India (2015)
Working Paper: Workfare and Human Capital Investment: Evidence from India (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp9486

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().