Effect of the National Rural Employment Guarantee Scheme on Intra-Household Allocation of Labour

MNREGA provides a legal guarantee for at least 100 days of employment in every financial year to adult members of any rural household willing to do unskilled manual work at the notified wage. Given the scale of the programme, it is likely to have a significant impact on the rural economy in terms of labour supply, wage rates, quality of assets built and migration.

This project focuses on the impact of MNREGA on the labour market through studying its impact on intra-household allocation of labour, particularly between private and public employment. It also investigates how MNREGA affects the agricultural sector, and whether it is leading to a contraction of private casual labour supplied to the market. It uses a dataset collected during 2005-2006 (pre-MNREGA), 2006-2007 (short-term) and 2010-2011 (long term) on a panel of villages and households; allows analysis of short and long term questions.

The findings show that relative to earlier periods of NREGS, a smaller proportion of casual lobourers work in the private sector in recent years. In addition, casual labourers who belong to households that partake in NREGS work have a lower probability of working in the private sector.