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Labor Market Effects of Social Programs: Evidence from India's Employment Guarantee

Research1 min read

Author: Clement Imbert, and John Papp

Published in: American Economic Journal: Applied Economics

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Abstract:

We estimate the effect of a large workfare program in India on private employment and wages by comparing trends in districts that received the program earlier relative to that received it later. Our results suggest that public sector hiring crowds out private sector work and increased private sector wages. We compute the implied welfare gains of the program by consumption decile. Our calculations show that the welfare gains to the poor from the equilibrium increase in private sector wages are large in absolute terms and large relative to the gains received solely by the program participants.

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r.i.c.e. is a non-profit research organization focused on health and well-being in India. Our core focus is on children in rural north India. Our research studies health care at the start of life, sanitation, air pollution, maternal health, social inequality, and other dimensions of population-level social wellbeing.

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