October 13, 2012

2012: Highlight # 8

In 2011-12, GoI spent US$ 8 bn. to provide employment to nearly 50 mn. rural households. Shilp Verma and Tushaar Shah explore the interactions between MGNREGA and local labor markets…

Labor Market Dynamics in Post-MGNREGA Rural India

Shilp Verma and Tushaar Shah

When it was launched in 2004, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was expected to materially alter the working of rural labor markets. Besides offering a modicum of employment security, it was expected to absorb some of the labor supply slack, lift equilibrium wage rate in the open market, put more purchasing power into the hands of the labor class, and reduce ‘distress migration’. It was also expected that medium and large farmers would view MGNREGA as a rival, creating peak-season labor shortages, pushing up farm wage rates and making farming even more unviable.

Have all these happened? In 2009-10, and then again in 2010-11, IWMI deployed more than 50 masters students of rural management to survey the landscape of these interactions. This highlight offers a quick synthesis of what the students found.

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