Is Workfare Cost-Effective against Poverty in a Poor Labor-Surplus Economy?

Murgai, Rinku ; Ravallion, Martin ; van de Walle, Dominique

World Bank, Washington, DC

关键词: ACCOUNTING;    ADJUSTMENT PROCESS;    AGRICULTURAL WAGE;    AGRICULTURAL WAGES;    ANTI-POVERTY;   

DOI  :  10.1596/1813-9450-6673
RP-ID  :  WPS6673

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Workfare schemes impose workrequirements on beneficiaries. This has seemed an attractiveidea for self-targeting transfers to poor people. Thisincentive argument does not imply, however, that workfare ismore cost-effective against poverty than evenpoorly-targeted options, given hidden costs ofparticipation. In particular, even poor workfareparticipants in a labor-surplus economy can be expected tohave some forgone income when they take up such a scheme. Asurvey-based method is used to assess the cost-effectivenessof India's Employment Guarantee Scheme in Bihar.Participants are found to have forgone earnings, althoughthese fall well short of market wages on average. Factoringin these hidden costs, the paper finds that for the samebudget, workfare has less impact on poverty than either abasic-income scheme (providing the same transfer to all) oruniform transfers based on the government'sbelow-poverty-line ration cards. For workfare to dominateother options, it would have to work better in practice.Reforms would need to reduce the substantial unmet demandfor work, close the gap between stipulated wages and wagesreceived, and ensure that workfare is productive -- that theassets created are of value to poor people.Cost-effectiveness would need to be reassessed at theimplied higher levels of funding.