Impact of Public Works on Household Occupational Choice

Evidence from NREGS in India

by Sinduja Srinivasan

Full Document

FormatFile SizeNotes
PDF file 0.2 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

I analyze the impact of India's public employment generation program (NREGS) on entrepreneurship. One of the main barriers to entrepreneurship in India is a lack of access to capital. My hypothesis is that NREGS allows liquidity constrained individuals to accumulate savings, enabling subsequent investment in a risky, but more profitable, venture, and ideally, permanent graduation from poverty. Taking advantage of the quasi-experimental nature of the program, I use a nationally representative data set to estimate the impact of NREGS on selection into entrepreneurship. I find that rates of non-agricultural entrepreneurship increase by 3 percentage points in NREGS districts (increasing rates from 15% to 18%), compared to areas that did not receive the program. This result is robust to various specifications, including two falsification tests. The results suggest that by acting as a source of credit, NREGS impacts household occupational choice, contributing to increased income, and ultimately promoting current and future family welfare.

This paper was made possible by the RAND Center for the Study of Aging and the RAND Population Research Center.

This report is part of the RAND Corporation Working paper series. RAND working papers are intended to share researchers' latest findings and to solicit informal peer review. They have been approved for circulation by RAND but may not have been formally edited or peer reviewed.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.