Employment demand and generation under MGNREGA in India: examining external and internal shocks with special reference to climate change and COVID-19 pandemic

Purpose - Despite India achieving many milestones under MGNREGA, the external and internal shocks result in below potential outcomes in employment demand and generation. This study examines how these shocks matter and how the migration-prone regions perform. Design/methodology/approach - This study, employing district-level data from 2018 to 2021, investigates how climate change and COVID-19 have affected the employment demand and supply. We applied RE-GLS and IV-2SLS regressions to examine the effects of shocks on employment demand and generation, respectively. The difference in difference panel model is employed to test the spatial effects of the pandemic. Further, we used RE-GLS and extended regression model to examine how external shocks interacting with migration affect unemployment rates. Findings - It was found that the pandemic increased employment demand and generation. This reflects the adverse effects of the pandemic and the swift action by the government. However, the responses were possibly different during climate shocks. The wage differential increased employment demand. However, demand decreased due to poor support from the support staff. The employment generation was higher in migration-prone districts, indicating that seasonal migration, being a lean-season phenomenon, continues to occur despite employment generation. Originality/value - This study contributes to the literature in several ways. It captures spatial variations while examining the impact of climate change and COVID-19. It investigates the performance of MGNREGA in migration-prone areas. In effect, the findings provide policymakers with greater insight into the issues. Peer review - The peer review history for this article is available at:https://publons.com/publon/10.1108/IJSE-02-2024-0132.