Public works programs (PWPs) are popular development interventions due to their potential 'double dividend' of transferring income to the poor while at the same time creating public infrastructure. However, PWPs are costly and demanding from an administrative perspective and it is not clear whether they are the most cost-effective intervention to reduce poverty. Therefore, an assessment of PW programs needs to understand which benefits and costs these programs entail relative to other interventions, and whether or not the extra cost can be outweighed by generating benefits over and above those of alternative interventions, such as Cash Transfer programs. This paper seeks to identify these benefits, and develops a conceptual framework that highlights four mechanisms through which PWPs could strengthen the productive capacity of poor households beyond the effects of Cash Transfers: productive investments, labor market effects, skills development, and increases in trade and production. It then reviews available empirical evidence from PWPs in developing countries. The results suggest that PWPs can induce productive investments via income and insurance effects when the program is sufficiently reliable and long-term. PWPs can also have positive welfare effects by raising wages, but potential adverse effects on labor markets have to be taken into account. Implicit or explicit training components of PWPs do not seem to increase the employability or business earnings of participants. Finally, there is only scant empirical evidence on the productive effects of the public infrastructure generated by PWPs, and further research is crucial to understand and quantify those effects. This paper concludes that PWPs are only preferable over alternative interventions if they generate substantial investments among the target group, if there is clear evidence that private-sector wages are below equilibrium wages, or if the public infrastructure generated in PWPs has substantial growth effects.
Improving child nutrition and empowering women are two important and closely connected development goals. Fostering female employment is often seen as an avenue to serve both these goals, especially if it helps to empower the mothers of undernourished children. However, maternal employment can influence child nutrition through different mechanisms, and the net effect may not necessarily be positive. We develop a theoretical model to show that maternal employment can affect child nutrition through changes in income, intrahousehold bargaining power, and time available for childcare. The links are analyzed empirically using panel data from farm households in rural Tanzania. We find that the links between maternal employment and child height‐for‐age Z‐scores (HAZ) are non‐linear. Off‐farm employment is negatively associated with child HAZ at low levels of labor supply. The association turns positive at higher levels of labor supply and negative again at very high levels. The associations between maternal on‐farm work and child nutrition are weaker and not statistically significant. These findings can help to better design development interventions that foster synergies and avoid potential tradeoffs between female empowerment and child nutrition goals.
Uninsured risk constrains households in their production decisions in many developing countries. Similarly to crop insurance, employment guarantees can support farmers in managing agricultural production risks. Evidence from representative panel data of Andhra Pradesh, India, suggests that the National Rural Employment Guarantee Scheme (NREGS) reduces households’ uncertainty about future income streams because it provides employment opportunities in rural areas independently of weather shocks and crop failure. Therewith the NREGS makes an ex-post labor supply response to agricultural shocks more efficient. Households with access to the NREGS are found to shift their production toward riskier but also more profitable crops. The observed shifts in agricultural production do considerably raise the profitability of agricultural production and hence the incomes of smallholder farmers. The findings are not driven by changes in the labor or cost intensity of those crops, which supports the idea that the causal mechanism underlying the observed changes is indeed an insurance effect.
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Public works programs (PWPs) are popular development interventions due to their potential ‘double dividend’ of transferring income to the poor while at the same time creating public infrastructure. However, PWPs are costly and demanding from an administrative perspective and it is not clear whether they are the most cost-effective intervention to reduce poverty. Therefore, an assessment of PW programs needs to understand which benefits and costs these programs entail relative to other interventions, and whether or not the extra cost can be outweighed by generating benefits over and above those of alternative interventions, such as Cash Transfer programs.This paper seeks to identify these benefits, and develops a conceptual framework that highlights four mechanisms through which PWPs could strengthen the productive capacity of poor households beyond the effects of Cash Transfers: productive investments, labor market effects, skills development, and increases in trade and production. It then reviews available empirical evidence from PWPs in developing countries. The results suggest that PWPs can induce productive investments via income and insurance effects when the program is sufficiently reliable and long-term. PWPs can also have positive welfare effects by raising wages, but potential adverse effects on labor markets have to be taken into account. Implicit or explicit training components of PWPs do not seem to increase the employability or business earnings of participants. Finally, there is only scant empirical evidence on the productive effects of the public infrastructure generated by PWPs, and further research is crucial to understand and quantify those effects. This paper concludes that PWPs are only preferable over alternative interventions if they generate substantial investments among the target group, if there is clear evidence that private-sector wages are below equilibrium wages, or if the public infrastructure generated in PWPs has substantial growth effects.
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