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Thursday, October 31, 2019 at 11:40am to 1:10pm
Uris Hall, 494
Karthik Muralidharan - University of California, San Diego
General Equilibrium Effects of (Improving) Public Employment Programs: Experimental Evidence from India
Abstract: The effects of public employment programs on poverty depend on both program earnings and broader labor market impacts. We estimate this composite effect, exploiting a large-scale randomized experiment across 157 sub-districts and 19 million people that improved the implementation of India's national rural employment guarantee scheme. This improvement raised low-income households' earnings by 13%, with nearly 90% of this gain coming from increases in market earnings, driven by significant increases in both market wages and private-sector employment. Labor supply (as measured by reservation wage) shifted up, and employment rose more in treated areas with more concentrated landholdings, consistent with monopsonistic labor markets. This may help explain how wages and employment increased together. Finally, we find longer-term increases in credit, private assets, number of enterprises, and non-agricultural employment. Overall, our results suggest that public employment programs can be an effective instrument for reducing poverty in developing countries.