Workfare and Human Capital Investment

Abstract

We examine the effect of India's National Rural Employment Guarantee Scheme (NREGS), one of the largest workfare programs in the world, on human capital investment. Since NREGS increases labor demand, it could increase the opportunity cost of schooling, lowering human capital investment even as incomes increase. We exploit the staged rollout of the program across districts for causal identification. Using a household survey of test scores and schooling outcomes for approximately 2.5 million rural children in India, we show that each year of exposure to NREGS decreases school enrollment by 2 percentage points and math scores by 2% of a standard deviation amongst children aged 13-16. In addition, while the impacts of NREGS on human capital are similar for boys and girls, adolescent boys are primarily substituting into market work when they leave school while adolescent girls are substituting into unpaid domestic work. We find mixed results for younger children. We conclude that anti-poverty programs which raise wages could have the unintended effect of lowering human capital investment.

Value chain development of bay leaf in Nepal: an impact assessment

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An Employment Guarantee as Risk Insurance? Assessing the Effects of the NREGS on Agricultural Production Decisions

“…In rural areas of India, casual agricultural 1 I outline here only the three mechanisms that seem to matter in the context of this study, namely in Andhra Pradesh and within the first two years of program implementation. Other mechanisms though which the NREGS could affect crop choice could be irrigation infrastructure created within the program (Deininger and Liu, 2013), education (Shah and Steinberg, 2015) and reduced conflict (Fetzer, 2014).…”

Climate Variability and Its Effects on School Attendance in Selected Public Senior Secondary Schools in Urban Areas of Ibadan, Nigeria

“…The effects of climate variations on human and human activities have been widely documented [13,14,15,16,17] Thus, the reality and negative consequences of extreme weather conditions have attracted studies on the relationship between climate variability and school attendance. Consequently, Shah and Steinberg [18] found out that in rural India when rainfall is higher, children switched out of school enrollment into productive work. The evidence of climate variability on school attendance was also provided by De Janvry et al [19] in Mexico, Colmer [20] in Ethiopia, Datar [21] in China and Villalobos [22] in Costa Rica.…”