Do rural public works influence agricultural wages? The case of the employment guarantee scheme in India

Since growth alone will not make a significant difference to agricultural wages in an oligopsonistic labour market, a case is made out for special employment programmes along the lines of the Employment Guarantee Scheme (EGS) in the Indian state of Maharashtra. The EGS has a substantial effect on agricultural wages—especially long-term. Diminution of income supplementation through this scheme, following a sharp reduction in the share of poor participants, was thus partly offset by higher agricultural wages. To the extent that this income diminution reflected exclusion of the poor from the EGS because of deficiencies in its design and implementation, prompt remedial action would enhance significantly their bargaining power vis-a-vis that of large landholders.