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Please use this identifier to cite or link to this item: http://hdl.handle.net/2108/254

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contributor.authorScandizzo, Pasquale Lucio-
contributor.authorGaiha, Raghav-
contributor.authorImai, Katsushi-
description.abstractConsistent with the theory of real options, it is argued that the value of the Employment Guarantee Scheme (EGS) in the Indian state of Maharashtra and its impact on workers’ behaviour do not depend so much on its income supplementation as on enlargement of opportunities in an uncertain environment of the local labour market. The choice between the EGS and other activities in rural areas is modelled in a dynamic optimisation framework that takes into account a fixed wage rate and certainty of employment under the former and a stochastic wage rate in the latter. Besides, entry and exit costs of various employment options are taken into account. Finally, allowance is made for volatility of regular labour market activities (e.g. agricultural wage earnings). The predictions of this model are validated with the help of a panel household survey in a semi-arid region of south India. If this analysis has any validity, the incentive case for rural public works schemes such as the EGS in terms of screening and deterrent arguments, premised on a fixed wage rate differential, needs to be reformulated.en
format.extent394869 bytes-
relation.ispartofseriesQuaderni CEIS; 189-
subjectentry and exit costsen
titleOption values, switches and wages: an analysis of the employmentguarantee scheme in Indiaen
subject.jelD3; Distributionen
subject.jelD8; Information and uncertaintyen
subject.jelH5; National government expenditures and related policiesen
subject.jelI3; Welfare and povertyen
subject.jelJ2; Time allocation, work behavior, and employment determinationen
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