Impact of MGNREGA on Rural Wages in India: Findings from the Rural Price Collection (RPC) Surveys (2001-2011)

Abstract

Governments in developing countries have experimented with a variety of poverty alleviation programs over the last few decades, including conditional and unconditional cash transfer programs, microcredit, and employment guarantee schemes, among others. The most successful and perhaps the most extensively studied poverty alleviation program has been Mexico’s PROGRESA, which adopted a human-capital investment approach towards lowering poverty rates. Another increasingly studied poverty alleviation program has been India’s Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) of 2005.1 Unlike PROGRESA, however, MGNREGA seeks to alleviate rural poverty by providing guaranteed employment to beneficiaries in public works. This paper assesses the impact of MGNREGA on rural wages in India, using the National Sample Survey Office’s (NSSO) Rural Price Collection (RPC) surveys from 2001-11. Additionally, I look at the gendered impacts of the program to specifically assess whether MGNREGA has led to reduction in wage inequality by gender in rural India.