The Impact of NREGS on Urbanization in India

This paper tests the impact of National Rural Employment Guarantee Scheme (NREGS) on rural-urban migration and urban unemployment in India. We use the Harris-Todaro framework to analyze labor market outcomes of this policy intervention. Using data from two rounds of National Sample Survey, we exploit quasi experiment setting where the NREGS was launched in phases across districts, over time. Results show that the NREGS reduced rural-urban migration and urban unemployment in India. Results are heterogeneous as this job scheme reduced migration for employment and marriage, but not for education. It lowered migration of unskilled labor but did not affect skilled labor