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Employment Guarantee Schemes and Wages in India

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  • Girish Bahal

Abstract

Using a novel data-set of district-wise program expenditure, we estimate the impact of large employment schemes on agricultural wages in India. Depending on the underlying theoretical mechanism, private wages can either respond to contemporaneous fluctuations in program expenditure or be sensitive to the stock of expenditure incurred under such programs. We first find that although program expenditure varied substantially both across and within districts, every district was covered under employment guarantee during the 2001-2010 period. Next, we empirically contrast the “spot” versus the “stock” effect of employment schemes on wages. Identification of program impact is achieved by partialling out a host of district and year specific controls. Exploiting the fund allocation process of these schemes, we further check for potentially endogenous district-year fluctuations. We find a significant positive impact on wages through the stock effect. In contrast, we do not find an immediate jump in wages suggesting weak spot effects.

Suggested Citation

  • Girish Bahal, 2016. "Employment Guarantee Schemes and Wages in India," Cambridge Working Papers in Economics 1626, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1626
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    14. Bahal, G., 2017. "Estimating Transfer Multiplier using Spending on Rural Development Programs in India," Cambridge Working Papers in Economics 1709, Faculty of Economics, University of Cambridge.
    15. Berg, Erlend & Bhattacharyya, Sambit & Rajasekhar, D. & Manjula, R., 2018. "Can public works increase equilibrium wages? Evidence from India’s National Rural Employment Guarantee," World Development, Elsevier, vol. 103(C), pages 239-254.
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    Cited by:

    1. Girish Bahal, 2020. "Estimating the Impact of Welfare Programs on Agricultural Output: Evidence from India," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(3), pages 982-998, May.
    2. Girish Bahal & Anand Shrivastava, 2022. "Fiscal transfers and inflation: evidence from India," Empirical Economics, Springer, vol. 63(4), pages 1837-1858, October.
    3. Bahal, G. & Shrivastava, A., 2016. "Labor Market Effects of Inconsistent Policy Interventions: Evidence from India’s Employment Guarantees," Cambridge Working Papers in Economics 1669, Faculty of Economics, University of Cambridge.
    4. Bahal, G., 2017. "Estimating Transfer Multiplier using Spending on Rural Development Programs in India," Cambridge Working Papers in Economics 1709, Faculty of Economics, University of Cambridge.
    5. Narayan Chandra Nayak & Bimal Kishore Sahoo & Mamata Jenamani & Alok Ranjan Mohanty & Runa Sen Chatterjee, 2021. "Does Convergence of Rural Development Schemes Improve Household Welfare? An Investigation of Mahatma Gandhi National Rural Employment Guarantee Act in Odisha, India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(4), pages 1023-1042, December.
    6. Bahal, Girish & Shrivastava, Anand, 2021. "Supply variabilities in public workfares," Journal of Development Economics, Elsevier, vol. 150(C).

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    More about this item

    Keywords

    Public works; Workfare; NREGA; Public capital; Wages;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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