SPILLOVER IMPACTS ON EDUCATION FROM EMPLOYMENT GUARANTEES

Abstract

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 percent of Indian households. MGNREGA has reduced rural poverty, but some have raised concerns that guaranteeing lower-skill (or uncredentialed) 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 gov-ernment’s rollout of MGNREGA. Further, I estimate these small negative impacts are inexpensive to counteract, particularly compared with MGNREGA expenditures on rural employment and poverty alleviation.