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Are Workfare Programs In India Effective? Public Policy professor Manisha Shah evaluates the impact of antipoverty programs

By Stan Paul 

Manisha Shah’s work in development economics has taken her around the world, from Mexico and Ecuador to India and Indonesia.

Her work seeks to evaluate the impact of seemingly well-intentioned efforts such as antipoverty programs as well as their unintended consequences, using primary data collection and applied microeconomics as a tool. At home at the Luskin School, she is the Applied Policy Project coordinator for the Department of Public Policy’s Master of Public Policy (MPP) students. In addition, she teaches graduate courses in microeconomics as well as a course on international development.

In a recent working paper for the National Bureau of Economic Research (NBER), where she is a faculty research associate, Shah and her co-author, Bryce Steinberg, have evaluated the effect of India’s National Rural Employment Guarantee Scheme (NREGS). In “Workfare and Human Capital Investment: Evidence From India,” the authors posit that the NREGS workfare program, which requires beneficiaries to work on local public works projects in order to receive benefits, “could increase the opportunity cost of schooling, lowering human capital investment even as incomes increase due to increased labor demand.”

The research shows that this government program, one of the largest in the world, actually lowers both school enrollment and math scores for students ages 13 to 16. For boys in India, the antipoverty program has them substituting work for school, while adolescent girls are substituting into unpaid domestic work at home (since their mothers are now more likely to be working outside the home). Put in human terms, this means, according to Shah, that the program in India “may have caused anywhere from 650,000 to 2.5 million adolescents to leave school prematurely.”

Interestingly, the additional income from the workfare program may benefit the very young children in the household — the 2- to 4-year-olds. The authors find that human capital outcomes improve for the very youngest children as a result of NREGS.

Overall, the workfare program may serve as a disincentive for adolescents to invest in education. This is important to policy makers, who may be considering workfare as a means of poverty alleviation, says Shah. “If we believe education is important for economic growth, and that workfare programs raise prevailing wages and cause older students to substitute toward work and away from school, lump sum grants or conditional cash transfers might be other policy options to consider.”

“The takeaway from these results is that social programs have price effects, and that these price effects can have very real consequences,” Shah’s report concludes. “Ultimately it is important to maximize their potential to alleviate poverty and improve the lives of the poor.”

Other areas Shah has examined include child health and development. Recent work has involved evaluating impacts of improved sanitation on child health outcomes in rural Indonesia. She also has written on the economics of sex markets to learn how more effective policies and programs can be deployed to slow the spread of HIV/AIDS and other sexually transmitted infections.

Where will her research take her next?

Shah says her next destination is Tanzania in East Africa to study intervention programs for adolescent girls. Programs to help girls stay in school and avoid risky sex and its harmful consequences are proving unsuccessful. Shah wants to know what’s going on and why this is happening, looking to the data to provide answers.

Manisha Shah is an Associate Professor in the Department of Public Policy at the UCLA Luskin School of Public Affairs. She also is a Faculty Research Fellow at the National Bureau of Economic Research (NBER), a Faculty Affiliate at UC Berkeley’s Center for Effective Global Action (CEGA) and a Research Associate at the Institute for the Study of Labor (IZA).