General equilibrium effects of (improving) public employment programs: experimental evidence from India

Resource type
Report
Authors/contributors
Title
General equilibrium effects of (improving) public employment programs: experimental evidence from India
Abstract
Public employment programs may affect poverty both directly through the income they provide and indirectly through general-equilibrium effects. We estimate both effects, exploiting a reform that improved the implementation of India’s National Rural Employment Guarantee Scheme (NREGS) and whose rollout was randomized at a large (sub-district) scale. The reform raised beneficiary households’ earnings by 14%, and reduced poverty by 26%. Importantly, 86%of income gains came from non-program earnings, driven by higher private-sector (real) wages and employment. This pattern appears to reflect imperfectly competitive labor markets more than productivity gains: worker’s reservation wages increased, land returns fell, and employment gains were higher in villages with more concentrated landholdings. Non-agricultural enterprise counts and employment grew rapidly despite higher wages, consistent with a role for local demand in structural transformation. These results suggest that public employment programs can effectively reduce poverty in developing countries, and may also improve economic efficiency.
Report Number
23838
Report Type
Working Paper
Institution
National Bureau of Economic Research
Date
2017-09
Short Title
General equilibrium effects of (improving) public employment programs
Accessed
09/11/2021, 21:10
Library Catalogue
National Bureau of Economic Research
Extra
Series: Working Paper Series DOI: 10.3386/w23838
Citation
Muralidharan, K., Niehaus, P., & Sukhtankar, S. (2017). General equilibrium effects of (improving) public employment programs: experimental evidence from India (Working Paper No. 23838). National Bureau of Economic Research. https://doi.org/10.3386/w23838