Abstract
Abstract The Covid-19 pandemic has highlighted the potential of social protection programs in mitigating labor market shocks. We examine the role of one of the world’s largest employment guarantee schemes, India’s MG-NREGA, in cushioning job losses in one of the worst affected economies due to the pandemic. Our findings indicate that regions with greater historical state capacity to provide public work under the scheme showed relatively smaller employment losses during the pandemic. Consequently, an increase in state capacity by one MG-NREGA workday per rural inhabitant in a district reduced job losses in rural areas in April–August 2020 by 7% overall and by 74% for rural women, over baseline employment rate. These cushioning effects strengthened as the mobility restrictions eased and were larger for women who were less mobile and less skilled. Our results suggest that employment guarantee programs can protect livelihoods, but for certain demographic groups relatively more than others depending on the nature and skill level of work offered.
Highlights
The Covid-19 pandemic is an unprecedented health and economic shock to the world economy
Ongoing research on the pandemic suggests that economic impacts differ across demographic groups, but there is limited evidence on both the role played by social safety nets on stemming labor market disruptions as well as their impacts across population groups, which may well vary depending on the design of programs
We examine the role of the nation-wide Mahatma Gandhi National Rural Employment Guarantee Act (MG-NREGA), the world’s largest employment guarantee program initiated in 2006 and bolstered following the pandemic, in cushioning job losses overall and as the stringency of the restrictions eased during April-August 2020
Summary
The Covid-19 pandemic is an unprecedented health and economic shock to the world economy. Social safety nets - a somewhat neglected policy tool - such as employment guarantees, unemployment insurance, Universal Basic Income (UBI) - are once again being debated.. Unlike a UBI that would not distinguish between working and dependent populations, employment guarantees provide support during labor market shocks to the workforce, potentially impacting productivity and bolstering demand by enhancing incomes (Devereux, 2002).. Phased reopening was initiated from June 8 This was followed by gradual easing of restrictions on mobility in June and further easing in night curfew and domestic air travel from July (Phase 2). From August 1, Phase 3 of ‘unlockdown’ with removal of night curfew saw further relaxations of restrictions on economic activity and mobility.. India’s GDP contracted by 23.9% during AprilJune and 7.5% in the second quarter (July-September) of the 2020-21 fiscal year as opposed to 4.2% growth in the GDP in 2019-20.5
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