Does Maharashtra's employment guarantee scheme guarantee employment? Effects of the 1988 wage increase

M. Ravallion, G. Datt, S. Chaudhuri

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Until recently, the piece rates on the employment guarantee scheme (EGS) have been such that a typical EGS worker could earn a daily wage roughly on a par with prevailing agricultural wages. In 1988 the piece rates paid by the EGS were doubled, in line with a doubling in statutory minimum wage rates in agriculture. This article attemps careful analysis of the effects of the shift in the EGS wage schedule. Our primary aim is to determine whether, or in what sense, employment under the scheme was guaranteed in the year following the wage increase. Section II describes how the main variables of interest - EGS employment levels, wage rates, and the cost of the scheme to the government - evolved during the period of interest. In Section III, an econometric model of monthly attendance under the EGS from 1975 to 1988 is used to examine the determinants of EGS employment and whether these changed after the wage increase. An estimate is then made of the extent of rationing under the EGS during the 12 months after the wage increase. New data on the scheme for 1987-90 is used in Section IV to address the question: does the EGS now "guarantee' employment, in the sense that workers can find local employment when they want it? Our conclusions are summarized in Section V. -from Authors

Original languageEnglish
Pages (from-to)251-275
Number of pages25
JournalEconomic Development & Cultural Change
Issue number2
Publication statusPublished - 1 Jan 1993

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