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Spatially Heterogeneous Effects of a Public Works Program

Joshua D Merfeld

MPRA Paper from University Library of Munich, Germany

Abstract: Most research on labor market effects of the Mahatma Gandhi National Rural Employment Guarantee Scheme focuses on outcomes at the district level. This paper shows that such a focus masks substantial spatial heterogeneity: treated villages located near untreated areas see smaller increases in casual wages than treated villages located farther from untreated areas. I argue that worker mobility, rather than spatial differences in implementation or program leakages, drives this spatial heterogeneity. I also present evidence that the effects of the program on private-sector employment display similar intra-district heterogeneity. Finally, by exploiting the difference in wage changes over space, I show that a large portion of consumption increases are driven by wage increases, not program employment. Overall, these results suggest that a district-level focus underestimates the true effect of the program on wages and also support the argument that increasing rural wages is an effective poverty-fighting tool in developing countries.

Keywords: India; Public Works; Labor; Wages; Spillovers (search for similar items in EconPapers)
JEL-codes: D50 H53 I38 J38 J46 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-lma and nep-pbe
Date: 2017
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