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

Laura V. Zimmermann

Economic Development and Cultural Change, 2024, vol. 72, issue 4, 2031 - 2067

Abstract: Most countries implement safety net programs for poor households. A widespread concern is that such programs crowd out private-sector jobs, but they could also affect workers’ job choice. This paper analyzes the first-year employment impacts of the world’s largest public-works program, India’s National Rural Employment Generation Scheme (NREGS), using a novel regression-discontinuity design. It focuses on districts treated in phase 2 of the NREGS rollout, which excludes poorer districts that were already treated. The results show that there is little evidence of a crowding out of private-sector jobs. Instead, male workers move from work for pay to family employment, which is driven by smallholder farmers.

Date: 2024
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