India’s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS): Wages, Reservation Wages and Programme Participation in Chitradurga District of Karnataka

Abstract

We evaluate India’s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). Using data from extensive primary surveys of MGNREGS beneficiaries and non-beneficiaries in Chitradurga district of Karnataka, we find that women tended to benefit more from the programme. This is a major MGNREGS contribution because women have always been paid less than men in farms and construction sites. The wages NREGS beneficiaries got were well below their asking wages (which was ₹ 207 a day), being only ₹ 98 a day on an average. The estimation of reservation wages shows that higher current wages increase reservation wages. The elasticity of reservation wage with respect to work experience is negative. We use a two-step regression model to understand the determinants of participation in the programme and of NREGS wages. We conclude that the programme has had a favourable impact on reducing rural poverty.