Public work programs and social capital: an exploration of NREGA in India

Abstract

Evaluations of public programs usually focus on whether policies have been able to achieve their intended goals and the pathways of such change occurring. For example, Desai et al. (2015) explore the myriad ways access to Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has changed labour market outcomes, education and health outcomes, and broadly the impact of MGNREGA on development outcomes. However, with schemes becoming increasingly community driven and participatory, an important question that rarely gets posed is the impact of such schemes on social capital within the community. In this paper we seek to answer this question in the context of the MGNREGA program in India using multiple waves of the India Human Development Survey (IHDS) survey. While developing social capital is not a frequent goal for public policy, the literature documents that many development outcomes are easier to achieve in the presence of social capital (Helliwell and Putnam 1995). However, there is little understanding of the causal relationship between social capital and public policy. In this paper, we study the impact of MGNREGA, a public works program, on social capital of rural households in India. The demand driven nature of the program creates variation in MGNREGA uptake that we exploit to understand how participating households have changed after the introduction of the scheme in comparison to the non-participating ones. Although MGNREGA was not primarily designed to create social capital, it may be an important, even if unintended, consequence of its community-based income generation strategy.