Research / BFI Working PaperJan 31, 2020

Spillover Impacts on Education from Employment Guarantees

Programs that provide lower-skill employment are a popular anti-poverty strategy in developing countries, with India’s employment-guarantee program (MGNREGA) employing adults in 23% of Indian households. MGNREGA has reduced rural poverty, but some have raised concerns that guaranteeing lower-skill employment opportunities may discourage investment in human capital and long-run income growth. Using large-scale administrative data and household survey data, I estimate precise spillover impacts on education that reject substantive declines in children’s education from the government’s rollout of MGNREGA. Further, I estimate that these small negative impacts are inexpensive to counteract, particularly compared to MGNREGA expenditures on rural employment and poverty alleviation.

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