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Workfare versus transfers in rural India

Author

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  • Alik-Lagrange, Arthur
  • Ravallion, Martin
Abstract
Prevailing methods for evaluating workfare schemes are inconsistent with the arguments made for workfare in poor rural economies. Those arguments emphasize the existence of higher involuntary underemployment among the poor and the fact that the type of work provided by these schemes gives disutility, deterring non-poor households from participating. To include these features, the consumption-based welfare metric used in past assessments of workfare schemes in underemployed developing countries is generalized to incorporate a welfare loss from casual manual work, while allowing the government to independently value the work done for other reasons. Using data for India’s National Rural Employment Guarantee Scheme (NREGS), the paper shows that the policy ranking switches in favor of a basic-income guarantee (BIG) over workfare. Allowing for a welfare loss from casual manual labor implies a more “poor-poor” targeting performance, but this is not sufficient to compensate for the direct welfare loss from the work requirement for plausible parameter values. A BIG dominates NREGS for a given total outlay on workfare wages.

Suggested Citation

  • Alik-Lagrange, Arthur & Ravallion, Martin, 2018. "Workfare versus transfers in rural India," World Development, Elsevier, vol. 112(C), pages 244-258.
    • Handle: RePEc:eee:wdevel:v:112:y:2018:i:c:p:244-258
    DOI: 10.1016/j.worlddev.2018.08.008
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    Cited by:

    1. Martin Ravallion, 2022. "On the Gains from Tradable Benefits‐in‐kind: Evidence for Workfare in India," Economica, London School of Economics and Political Science, vol. 89(355), pages 770-787, July.
    2. Ravallion, Martin, 2019. "Guaranteed employment or guaranteed income?," World Development, Elsevier, vol. 115(C), pages 209-221.
    3. Jules Gazeaud & Victor Stephane, 2023. "Productive Workfare? Evidence from Ethiopia's Productive Safety Net Program," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(1), pages 265-290, January.
    4. Fouksman, E. & Klein, E., 2019. "Radical transformation or technological intervention? Two paths for universal basic income," World Development, Elsevier, vol. 122(C), pages 492-500.
    5. repec:ehl:lserod:110766 is not listed on IDEAS
    6. Marianne Bertrand & Bruno Crépon & Alicia Marguerie & Patrick Premand, 2021. "Do Workfare Programs Live Up to Their Promises? Experimental Evidence from Cote D’Ivoire," NBER Working Papers 28664, National Bureau of Economic Research, Inc.
    7. Sudha Narayanan & Sharada Srinivasan, 2020. "No country for young women farmers: A situation analysis for India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-041, Indira Gandhi Institute of Development Research, Mumbai, India.
    8. Martin Ravallion, 2021. "On the Gains from Tradeable Benefits-in-Kind," Working Papers gueconwpa~21-21-13, Georgetown University, Department of Economics.
    9. Martin Ravallion, 2019. "Is a Decentralized Right-to-Work Policy Feasible?," NBER Working Papers 25687, National Bureau of Economic Research, Inc.
    10. Alik-Lagrange, Arthur & Buehren, Niklas & Goldstein, Markus & Hoogeveen, Johannes, 2023. "Welfare impacts of public works in fragile and conflict affected economies: The Londö public works in the Central African Republic," Labour Economics, Elsevier, vol. 81(C).
    11. Della Guardia, Anne & Lake, Milli & Schnitzer, Pascale, 2022. "Selective inclusion in cash transfer programs: Unintended consequences for social cohesion," World Development, Elsevier, vol. 157(C).

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    More about this item

    Keywords

    Workfare; Welfare measurement; Unemployment; Targeting; Basic income;
    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

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