The Effect of Employment Guarantee Program on Smoking

Abstract

We test whether employment guarantee programs increase the likelihood of taking up or increasing intensity of smoking? Continuing from income elasticity and health behavior studies on low-income adults in developed countries, we provide a causal test of whether smoking is a normal good for low-income adults in developing countries. Our identification relies on staggered implementation of Mahatma Gandhi National Rural Employment Guarantee Program (NREGA) from 2006 to 2009 in different states in India and controls for self-selection into the program. Based on 2005 and 2012 waves of India Human Development Survey (IHDS) that were conducted before and after implementation of NREGA and using two-stage residual inclusion (2SRI) estimation method, NREGA participants are at least 9.75 percentage point more likely to smoke than those that did not participate in NREGA. The results are robust to alternate specifications. Our study is the first to highlight negative health behaviors resulting from participation in employment guarantee programs.