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

Laura Zimmermann

No 504, GLO Discussion Paper Series from Global Labor Organization (GLO)

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.

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 (search for similar items in EconPapers)
JEL-codes: H53 H75 I38 J22 J38 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-dev and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:504

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