Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/124975
Authors: 
Basu, Parantap
Sen, Kunal
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9454
Abstract: 
We examine the efficacy of a popular anti-poverty programme, namely the National Rural Employment Guarantee Act (NREGA) of the Government of India. We argue that a chronic friction of wage payment delay in this flagship programme could adversely affect the welfare of the poor through two channels. First, it causes deferred consumption. Second, it turns labour into a credit good which makes an indebted household work harder to clear off his existing debt. The loss of welfare persists even when the worker has an outside employment option. If a programme of financial inclusion increases the indebtedness of the poor, a wage payment delay in the NREGA programme could escalate this welfare loss although the official indicator of success (i.e., participation) may not reveal this friction.
Subjects: 
NREGA
employment guarantee
credit good
financial inclusion
JEL: 
H53
O11
J43
Document Type: 
Working Paper

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