Aggregate Effects from Public Works: Evidence from India
This paper explores the aggregate economic effects from India's National Rural Employment Guarantee Scheme (NREGS), which provides up to 100 days of labor to rural laborers at the mandated minimum wage. We examine the within-district change to night-time lights and banking deposits using the staggered program rollout for identification. We find consistent and robust evidence that NREGS increased aggregate economic output by 1-2% per capita measured by night-time lights. This effect, however, is not equal across districts. We observe no positive effect of the program in poorer districts, illuminating an important source of heterogeneity.
Shah gratefully acknowledges funding from NSF grant #1658852. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.