The Spillovers of Employment Guarantee Programs on Child Labor and Education - academic research paper

Jul 19, 2026

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Many developing countries use employment guarantee programs to reduce poverty, but their effects on children’s human capital can be unintended. This study uses the staggered rollout of India’s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) to assess changes in school enrollment and child labor. MGNREGA lowers relative school enrollment in treated districts, driven mainly by primary-age children, while later grades experience deteriorating performance. National employment evidence indicates child labor increases, highlighting perverse spillovers.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages15

Reading Time38 min

Abstract

Introduction

Policy context: employment guarantee programs and MGNREGA

Empirical strategy and data overview

Main findings on enrollment and child labor

Heterogeneous effects by age and school type

Mechanisms and roll-out timing

Author information and publication notes

Pub lic Disclosure Authorized Pub lic Disclosure Authorized The World Bank Economic Review, 34(1), 2020, 164–178 doi: 10.1093/wber/lhy027 Article The Spillovers of Employment Guarantee Programson Child Labor and Education Tianshu Li and Sheetal Sekhri Abstract Many developing countries use employment guarantee programs to combat poverty. This study examines the consequences of such employment guarantee programs for the human capital accumulation of children. It exploits the phased roll-out of India’s flagship Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) to study the effects on enrollment in schools and child labor. Introduction of MGNREGA results in lower relative school enrollment in treated districts. It also finds that the drop in enrollment is driven by primary school children. Children in higher grades are just as likely to attend school under MGNREGA, but their school performance deteriorates. Using nationally representative employment data, the study finds evidence indicating an increase in child labor highlighting the unintentional perverse effects of the employment guarantee schemes for human capital. JEL classification: O12, O15, I25, J21 Keywords: rural employment, human capital, child labor 1. Introduction Both developed and developing countries use employment guarantee programs as a safety net mechanism to reduce poverty and economic vulnerability.1 This paper uses the temporal and spatial variation in the roll-out of the Indian government’s 2005 National Rural Employment Guarantee Act (NREGA, now named MGNREGA) to evaluate the impact of the policy on children’s educational and employment outcomes. Several studies have shown that MGNREGA increased the demand for labor and increased rural wages (Imbert and Papp 2015; Zimmerman 2012 ) . In light of this, the scheme can have profound effects Sheetal Sekhri (corresponding author) is an associate professor at the University of Virginia, Charlottesville; her email is[ssekhri@virginia.edu. Tianshu Li](ssekhri@virginia.edu. Tianshu Li) is an assistant professor at the Institute of Urban Development of Nanjing Audit University; his email address is [tl4bz@virginia.edu. The authors](tl4bz@virginia.edu. The authors) thank Leora Friedberg, Heidi Schramm, and Kartini Shastry for insightful comments. A supplementary online appendix is available with this article at The World Bank Economic Review website. 1 The earliest experiments with this policy lever date back to the 1817 Poor Employment Act and the 1834 Poor Law Amendment Act in Great Britain (Blaug 1963, 1964), and the New Deal programs of the 1930s in the United States (Bernstein 1968; Kesselman 1978) . More recently Bangladesh in 1983, Botswana in 1960, Chile in 1987, India in 1978 and 2001, Kenya in 1992, Pakistan in 1992, and the Philippines in 1990, have implemented variants of employment guarantee schemes. See Mukherjee and Sinha (2013) for details. © The Author(s) 2019 . Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / THE WORLD BANK. All rights reserved. For permissions, please e-mail: [journals.permissions@oup.com](journals.permissions@oup.com) Downloaded from [https://academic.oup.com/wber/article/34/1/164/5542576 by International Monetary Fund user on 23 June 2021](https://academic.oup.com/wber/article/34/1/164/5542576 by International Monetary Fund user on 23 June 2021) on children’s education and employment, as it influences the opportunity cost of schooling. Potentially, the value of children’s time both in the labor force and at home can increase. A number of factors make India’s flagship MGNREGA program an ideal setting to study the impact of employment guarantee schemes on schooling and child labor. First, the scale of the program is massive. By its fifth year, the program provided employment opportunities to 53 million households for 2.3 billion man-days, making it the world’s largest operat

FAQs

How does MGNREGA affect school enrollment in treated districts?

Introduction of MGNREGA reduces relative school enrollment in treated districts, with the decline primarily driven by primary school children.

Does MGNREGA change attendance for higher-grade children?

Higher-grade children are about as likely to attend school, but their school performance deteriorates under MGNREGA.

What evidence links MGNREGA to child labor?

Using nationally representative employment data, the study finds evidence that child labor increases, indicating unintended perverse effects on human capital.

Jul 19, 2026

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