Is a Decentralized Right-to-Work Policy Feasible?
Evidence on the implementation of India’s National Rural Employment Guarantee Act suggests that the available work is often rationed by local leaders in poor areas, and that this is an important factor limiting the scheme’s impact on poverty. The paper offers explanations for this empirical finding, with likely relevance to other decentralized, rights-based, programs. It is shown that rationing of work opportunities can arise under decentralized implementation in poor places even when the center wants to honor the employment guarantee. Two main drivers of such rationing are identified: local administrative costs and local corruption. Administrative reforms by the center can have perverse effects. Policy implications are drawn for how to better assure that the stipulated rights are attained in practice.
For comments on this paper, the author thanks Ken Kletzer, Rinku Murgai and Dominique van de Walle. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.