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The “Discouraged Worker Effect†in public works programs: Evidence from the MGNREGA in India

Author

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  • Narayanan, Sudha
  • Das, Upasak
  • Liu, Yanyan
  • Barrett, Christopher B.

Abstract

This study investigates the consequences of poor implementation in public workfare programs, focusing on the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in India. Using nationally representative data, we test empirically for a discouraged worker effect arising from either of two mechanisms: administrative rationing of jobs among those who seek work and delays in wage payments. We find strong evidence at the household and district levels that administrative rationing discourages subsequent demand for work. Delayed wage payments seem to matter significantly during rainfall shocks. We find further that rationing is strongly associated with indicators of implementation ability such as staff capacity. Politics appears to play only a limited role. The findings suggest that assessments of the relevance of public programs over their lifecycle need to factor in implementation quality.

Suggested Citation

  • Narayanan, Sudha & Das, Upasak & Liu, Yanyan & Barrett, Christopher B., 2017. "The “Discouraged Worker Effect†in public works programs: Evidence from the MGNREGA in India," IFPRI discussion papers 1633, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:ifprid:1633
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    Cited by:

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    3. Rodriguez, Zachary, 2022. "The power of employment: Effects of India’s employment guarantee on women empowerment," World Development, Elsevier, vol. 152(C).
    4. Jain Ritika, 2021. "Information and Communication Technology Adoption and the Demand for Female Labor: The Case of Indian Industry," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(2), pages 695-722, April.
    5. Emilio Congregado & Ewa Galecka-Burdziak & Antonio A. Golpe & Robert Pater, 2021. "Separating aggregate discouraged and added worker effects: the case of a former transition country," Oeconomia Copernicana, Institute of Economic Research, vol. 12(3), pages 729-760, September.
    6. Sudha Narayanan & Christian Oldiges & Shree Saha, 2022. "Does workfare work? India's employment guarantee during COVID‐19," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(1), pages 82-108, January.
    7. Das, Upasak & Maiorano, Diego, 2019. "Post-clientelistic initiatives in a patronage democracy: The distributive politics of India’s MGNREGA," World Development, Elsevier, vol. 117(C), pages 239-252.
    8. Cerciello, Massimiliano & Agovino, Massimiliano & Garofalo, Antonio, 2019. "The caring hand that cripples? The effects of the European regional policy on local labour market participation in Southern Italy," Socio-Economic Planning Sciences, Elsevier, vol. 68(C).
    9. Upasak Das, 2021. "Rural employment guarantee programme in India and its impact on household educational decisions: A focus on private coaching," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(6), pages 1005-1025, August.
    10. Deininger, Klaus & Liu, Yanyan, 2019. "Heterogeneous welfare impacts of National Rural Employment Guarantee Scheme: Evidence from Andhra Pradesh, India," World Development, Elsevier, vol. 117(C), pages 98-111.
    11. A. Amarender Reddy & Namrata Singha Roy & Divya Pradeep, 2021. "Has India’s Employment Guarantee Program Achieved Intended Targets?," SAGE Open, , vol. 11(4), pages 21582440211, October.
    12. Swati Narayan, 2022. "Fifteen Years of India’s NREGA: Employer of the Last Resort?," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(3), pages 779-799, September.
    13. Ranjana Roy & Prerna Terway, 2024. "Rising Wage Income and the Role of MGNREGA among Agricultural Households in India: Evidence from the Situation Assessment Survey, 2018–19," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 67(3), pages 865-881, September.

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    More about this item

    Keywords

    wages; labor; social protection; social safety net; Mahatma Gandhi National Rural Employment Guarantee Scheme; administrative rationing; discouraged worker effect; employment guarantee; J08 Labor Economics Policies; J38 Wages; Compensation; and Labor Costs: Public Policy;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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