Click here for search results
Is workfare cost-effective against poverty in a poor labor-surplus economy?
 
Author:Murgai, Rinku; Ravallion, Martin; van de Walle, Dominique; Collection Title:Policy Research working paper ; no. WPS 6673
Country:India; Date Stored:2013/10/22
Document Date:2013/10/01Document Type:Policy Research Working Paper
SubTopics:Income; Rural Poverty Reduction; Banks & Banking Reform; Labor Markets; Labor PoliciesLanguage:English
Major Sector:Agriculture, fishing, and forestryRel. Proj ID:IN-Impactsof Bihar Rural Employment Guarantee -- -- P120086;
Region:South AsiaReport Number:WPS6673
Sub Sectors:General agriculture, fishing and forestry sectorVolume No:1 of 1

Summary: Workfare schemes impose work requirements on beneficiaries. This has seemed an attractive idea for self-targeting transfers to poor people. This incentive argument does not imply, however, that workfare is more cost-effective against poverty than even poorly-targeted options, given hidden costs of participation. In particular, even poor workfare participants in a labor-surplus economy can be expected to have some forgone income when they take up such a scheme. A survey-based method is used to assess the cost-effectiveness of India's Employment Guarantee Scheme in Bihar. Participants are found to have forgone earnings, although these fall well short of market wages on average. Factoring in these hidden costs, the paper finds that for the same budget, workfare has less impact on poverty than either a basic-income scheme (providing the same transfer to all) or uniform transfers based on the government's below-poverty-line ration cards. For workfare to dominate other options, it would have to work better in practice. Reforms would need to reduce the substantial unmet demand for work, close the gap between stipulated wages and wages received, and ensure that workfare is productive -- that the assets created are of value to poor people. Cost-effectiveness would need to be reassessed at the implied higher levels of funding.

Official Documents
Official, scanned versions of documents (may include signatures, etc.)
File TypeDescriptionFile Size (mb)
PDF 44 pagesOfficial version*3.08 (approx.)
TextText version**
How To Order

See documents related to this project
* The official version is derived from scanning the final, paper copy of the document and is the official,
archived version including all signatures, charts, etc.
** The text version is the OCR text of the final scanned version and is not an accurate representation of the final text.
It is provided solely to benefit users with slow connectivity.



Permanent URL for this page: http://go.worldbank.org/SIWQH0I000