Transfer Benefits From Public-Works Employment: Evidence for Rural India

Abstract

Current knowledge provides little guidance on one of the key questions in evaluating public employment schemes aimed at directly reducing poverty: What are the net income gains to participating workers? This paper offers an answer for rural public employment in two villages in the state of Maharashtra in India. A model of intra-household time allocation is proposed, and estimates are made using household data over six years. The empirical implementation indicates that the projects induce significant behavioural responses. Transfer benefits are large, and are greatly underestimated using prevailing market wage rates for similar work to estimate forgone incomes.

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