Targeting the poor by voluntary participation: evidence from the National Rural Employment Guarantee Scheme in India

Nicolas Gravel, GREQAM
Abhiroop Mukhopadhyay, Indian Statistical Institute

Anti Poverty Policies are often very hard to implement. The National Rural Employment Guarantee Scheme launched in India is one of the largest policy initiatives in the world that seeks to alleviate poverty by guaranteeing households at least 100 days of work. It attempts to solve targeting issues by designing a scheme where primarily the poor have an incentive to voluntarily opt for doing public works, but the rich may not find it worthwhile. We investigate this underlying assumption by looking at household data from one such targeted district in India. We look at the determinants of who opts for the scheme and find almost every household takes advantage of the scheme. Further, we find that public works is taking people away from private casual labor. The lesson learnt from the Indian experience is that the targeting efficiency crucially depends on public works wages.