Workfare as an Effective Way to Fight Poverty: The Case of India's NREGS

This paper analyzes the impact of India's National Rural Employment Guarantee Scheme (NREGS) on poor rural households. In particular, we study the impact of the program on food security, savings, and health outcomes. We have a panel data of 1,064 households from 198 villages of Andhra Pradesh, over two years. In the early stage of the program, several households that applied for work were denied employment due to shortage of work. We exploit this exogenous variation to calculate triple-difference estimates of the impact of the program. Our results indicate that the NREGS significantly increased the monthly per capita expenditure on food and non-food consumables. The program also improved food security by a significant reduction in the number of meals foregone by households per week. The program raised the probability of holding savings and reduced the incidence of depression among rural households.