Inconsistent Policy Evaluation: A Case Study for a Large Workfare Program
Evaluations of workfare programs in poor rural economies have typically ignored two features that policy makers stress: involuntary unemployment and the expected welfare losses from work requirements. The paper generalizes past evaluation theory and methods to incorporate both features, and shows that doing so can switch the policy ranking in favor of welfare over workfare. A case study for India’s massive National Rural Employment Guarantee Scheme indicates lower impacts on poverty than suggested by past methods, despite a more “poor-poor” incidence. A basic-income guarantee would dominate net workfare earnings in terms of the impact on poverty for a given budgetary outlay.
For their comments on an earlier version of this paper the authors thank Sylvain Chabé-Ferret, Pierre Dubois, Rinku Murgai, Dominique van de Walle, Jasmin Fliegner, Thomas Chaney, Jeanne Commault and seminar participants at the Toulouse School of Economics and at EDePo (IFS, London), and participants of 2014 EUDN workshop. Alik-Lagrange acknowledges support from Ecole Normale Supérieure-Cachan. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.