Public works programs and agricultural risk: Evidence from India
52 Pages Posted: 25 May 2018 Last revised: 21 Oct 2022
Date Written: October 6, 2022
Abstract
The agricultural sectors in many low- and middle-income countries remain highly vulnerable to weather risk, a vulnerability that will only intensify under climate change. Public works programs, which are growing in popularity globally, have the potential to impact weather-related agricultural risk. I explore the impact of India’s National Rural Employment Guarantee Act (NREGA) on weather-related agricultural risk. My empirical strategy exploits the staggered rollout of NREGA and random weather fluctuations. Using a nationwide panel of data, I find that NREGA makes crop yields more sensitive to low rainfall shocks. I posit that these results are consistent with a labor market channel, by which NREGA increases non-farm labor supply in low rainfall years, and an income channel, by which NREGA leads to riskier agricultural practices. These results highlight the importance of understanding how social protection programs shape agricultural risk.
Keywords: public works, workfare, agriculture, production risk, India
JEL Classification: J43, O12, O13, Q56
Suggested Citation: Suggested Citation