Fiscal Policy, as the “Employer of Last Resort”: Impact of Direct fiscal transfer (MGNREGA) on Labour Force Participation Rates in India

Chakraborty, Lekha S and Singh, Yadawendra (2018): Fiscal Policy, as the “Employer of Last Resort”: Impact of Direct fiscal transfer (MGNREGA) on Labour Force Participation Rates in India.

Abstract

We examine the impact of conditional fiscal transfers on public employment across gender in India taking the case of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). The MGNREGS, as an “employer of last resort” fiscal policy, is a direct employment transfer, which guarantees to provide 100 days of paid work opportunities at a predetermined wage for public works in India through a self-selection criterion. Using unit record data of the latest 68th round of NSS Employment-Unemployment survey, we examined gender differential impacts of MGNREGS on labour force participation rates across States in India. The unit of analysis in our paper is not ‘household’, but is one step ahead to capture the intra-household level of participating behaviour in the economic activity. The results, based on the survey enumerating 2,80,763 individuals in rural areas, revealed that there is a striking heterogeneity in the gender impacts of job guarantee programme across States of India. The probit estimates showed that MGNREGS job card holder’s labour force participation rates were higher than the non-card holders and the result was more pronounced for women. The analysis of the time-use patterns and the unpaid care economy statistics of job guarantee card holders obtained from the unit records also shows that augmenting public investment in care economy infrastructure is significant for the job guarantee programme to function at its full potential in India.

• Item Type: MPRA Paper
• Language: English
• Keywords: job guarantee, fiscal policy, gender, care economy, labour force participation rate
• Subjects: C - Mathematical and Quantitative Methods > C4 - Econometric and Statistical Methods: Special Topics > C40 - General; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C55 - Large Data Sets: Modeling and Analysis; D - Microeconomics > D3 - Distribution > D33 - Factor Income Distribution; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H77 - Intergovernmental Relations ; Federalism ; Secession; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J48 - Public Policy

References

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