Government Employment Guarantee, Labor Supply and Firms’ Reaction: Evidence from the Largest Public Workfare Program in the World

Agarwal, S and Alok, S and Chopra, Y and Tantri, P L (2017) Government Employment Guarantee, Labor Supply and Firms’ Reaction: Evidence from the Largest Public Workfare Program in the World. Working Paper. SSRN. (Unpublished)

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Abstract

Using establishment-level employment and operating data, we examine the impact of the Indian government’s employment guarantee program on labor and firm behavior. We exploit the staggered implementation of the program for identification and find that the program led to a 10% reduction in permanent workforce in firms. Firms responded to the adverse labor supply shock by resorting to increased mechanization. This significantly increases the firms’ cost of production, thereby leading to a decline in net profits and productivity. These effects manifest primarily in firms paying low wages, having low labor productivity and greater sales volatility, and firms located in states with pro-employer labor regulations.

Affiliation: Indian School of Business
ISB Creiators:
ISB Creators
ORCiD
Alok, S
UNSPECIFIED
Tantri, P L
UNSPECIFIED
Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Workfare, Labor markets, Labor supply, Labor scarcity, Capital investments, Labor and Finance, Labor-Technology Substitution, MNREGA, NREGS, NREGA
Subjects: Finance
Depositing User: Ilayaraja M
Date Deposited: 19 May 2019 17:17
Last Modified: 01 Jul 2019 17:06
URI: http://eprints.exchange.isb.edu/id/eprint/1025
Publisher URL: http://dx.doi.org/10.2139/ssrn.2880629
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