This study aims to thoroughly evaluate the impacts of India’s National Rural Employment Guarantee Scheme (NREGS), the largest public works project in the world. NREGS was started in 2006, following the 2005 Act that provides each rural household with a legal right to be employed up to 100 days per year at state-level minimum wage rate. NREGS has the following characteristics. First, it is demand-driven. Second, all rural households are eligible for NREGS and self-selection is the major mechanism to target the poor. Third, NREGS offers equal wage rates to women for the same work as men and makes payment directly to the individual workers. Fourth, NREGS projects are selected at the local level.
View more We aim to explore the following research questions:
1. Targeting and Implementation
How well does NREGS target its intended group? Are the poor (non-poor) self-selecting into (out of) the program, as intended?
2. Partial equilibrium effects
How does NREGS affect the labor allocation, migration, and welfare of its participants? Does participation in NREGS work “crowd out” participants’ labor supply for other purpose such as working on their own or neighbors’ fields?
3. General equilibrium effects and income distributional effects
What are the general equilibrium effects? And what are the distributional effects of NREGS over different types of households such as land owners, laborers, etc.?
4. Gender-specific effects
What are the gender-specific effects? We aim to provide evidence on the magnitude of economic and non-economic benefits derived by females in different income groups from NREGS and the mechanisms that may underlie such effects.
We use two existing data sets: a three-round (2004, 2006, and 2008) panel data set from 4,800 households in Andhra Pradesh and the National Sample Survey data which are collected annually and cover all districts in India.
To examine partial equilibrium effects, we compare NREGS participants with non-participants. Methodologically, we use propensity score matching, double (or triple) differences, and instrumental variable methods. To examine general equilibrium effects (or spillover effects), we explore the phase-in structure of NREGS implementation to compare non-participants in the treatment areas with non-participants in the control areas, using propensity score matching and double (or triple) differences.
The panel data will allow us to control for observed confounding factors, and to examine heterogeneous impacts due to initial conditions. Propensity score matching and instrumental variable methods are used to deal with the selection bias due to non-random program placement and self-selection of program participation.
To mark the culmination of a collaborative research project titled Impact Evaluation of the
MGNREGA in India, funded by a grant under the 3ie Open Window 4, the Indira Gandhi Institute of
Development Research (IGIDR), International Food Policy Research Institute (IFPRI) and Cornell
University conducted a meeting on “Implementation of MGNREGA in India: A Review of Impacts
for Future Learning”, on Monday, 8 June 2015 at the NASC Complex in New Delhi. The goal was to
share research on the impacts of the MGNREGS conducted as part of the project and by other
researchers elsewhere and to engage in a dialogue with those serving or advising the Government
in various capacities.
ndia’s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) employs about 50 million men and women every year and offers an important opportunity for in-vestigating the link between public works spending and the politi-cal allocation of funds. First of all, MGNREGS is derived from the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which grants citizens the “right to work” on local in-frastructure projects at a set minimum wage. This is one of the few if not the only program in the world to nest a government workfare program within a legal entitlement. As such, MGNREGS is ostensi-bly designed to be a self-targeting and demand-driven program, where labor is aggregated and public works are selected at the lo-cal level before final approval at higher levels of government. Sec-ondly, MGNREGS also put in place a suite of accountability and transparency mechanisms, including but not limited to publicly-available data and social audits. The extent to which these unique features of MGNREGS have eliminated avenues for taking ad-vantage the program for political gain is a question worth exploring.
In this note, the authors find that overall, poorer households are overwhelmingly more likely to self-select into the program (i.e., seek MGNREGS employment) than better-off households, indicating that the self-targeting design of the program is in and of itself pro-poor. While at the national level, administrative rationing patterns exhibit a bias toward the middle class rather than toward the poor, this varies immensely at the state level. Furthermore, because the self-selection effects generally dominate the rationing effects, the overall result is that MGNREGS targeting is noticeably pro-poor, especially favoring lower caste households. However, female-headed households are less likely to benefit from the pro-gram, due to both lower job-seeking rates and higher levels of administrative rationing than seen for male-headed households.