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    Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor

    Female Labour Force Participation and Child Education in India: The Effect of the National Rural Employment Guarantee Scheme

    IZA DP No. 6593

    May 2012

    Farzana Afridi Abhiroop Mukhopadhyay Soham Sahoo

  • Female Labour Force Participation and Child Education in India: The Effect of the National

    Rural Employment Guarantee Scheme

    Farzana Afridi Indian Statistical Institute

    and IZA

    Abhiroop Mukhopadhyay Indian Statistical Institute

    and IZA

    Soham Sahoo Indian Statistical Institute

    Discussion Paper No. 6593 May 2012


    P.O. Box 7240 53072 Bonn


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    Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.


  • IZA Discussion Paper No. 6593 May 2012


    Female Labour Force Participation and Child Education in India: The Effect of the National Rural Employment Guarantee Scheme



    We study the impact of India’s National Rural Employment Guarantee Scheme (NREGS) on children’s educational outcomes via women’s labour force participation. Using data from the Young Lives Study and taking advantage of the spatial and temporal variation in the intensity of implementation of the NREGS, we find that greater participation of mothers in the program is associated with better educational outcomes of their children. Father’s participation in the NREGS, on the other hand, has a negative effect on children’s education. Further, the estimated impact of mother’s program participation is over and above any income effect induced by the scheme and is robust to concerns about endogeneity of labour force participation and differences in economic trends between districts. We provide evidence which suggests that the mechanism through which children’s educational outcomes improve is empowerment of mothers resulting from better labour market opportunities for females. JEL Classification: I21, I38, J16 Keywords: labour, education, gender, bargaining Corresponding author: Farzana Afridi Indian Statistical Institute Planning Unit 7, S.J.S. Sansanwal Marg New Delhi 110016 India


    * We are grateful to Young Lives, which commissioned this study. The paper is under review for Young Lives Working Paper series. The data are from Young Lives, an international study of childhood poverty, following the lives of 12,000 children in 4 countries (Ethiopia, India, Peru and Vietnam) over 15 years (www.younglives.org.uk). Young Lives is core-funded from 2001 to 2017 by UK aid from the Department for International Development (DFID), and co-funded by the Netherlands Ministry of Foreign Affairs from 2010 to 2014. Sub-studies are funded by the Bernard van Leer Foundation and the Oak Foundation. The views expressed here are those of the authors and are not necessarily those of, or endorsed by, Young Lives, the University of Oxford, DFID or other funders.

    mailto:fafridi@isid.ac.in� http://www.younglives.org.uk/�

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    1. Introduction

    The World Development Report (2012), focusing on gender equality, finds that women in

    the poorer regions of the world continue to suffer from disadvantages in the economic

    sphere. Although, significant progress has been made in reducing gender disparities in

    health and educational outcomes, economic opportunities continue to be limited for

    women. The Report underlines the policy priorities of closing gender differences in

    access to economic opportunities and earnings as well as increasing women‟s voices

    within households as a means to reducing poverty in developing countries. In this paper

    we study the impact of one such policy initiative in India – the National Rural

    Employment Guarantee Scheme (NREGS) initiated in 2006. While the program‟s main

    objective is to alleviate rural poverty by legally guaranteeing a minimum of 100 days of

    annual employment to households, it also has the potential to empower rural women

    through greater access to labour market opportunities.

    From a gender perspective, there are two interesting features of this program.

    First, the wage rate provided in this program is uniform across gender, and second, it

    gives priority to female employment and targets at least one third of the beneficiaries to

    be women. Thus, NREGS not only has the potential to raise female labour force

    participation rates by bringing employment opportunities almost to their doorsteps, the

    equal wage rates provided in NREGS program can potentially reduce any gender

    disparity prevalent in the rural labour markets. We, therefore, hypothesize that the

    introduction of this program should lead to greater labour force participation of women,

    either on the extensive or intensive margin or both.

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    A rise in women‟s labour force participation can potentially impact individual and

    household behaviour on several fronts including marriage, fertility, and intra-household

    distribution of resources. This paper analyzes the effect of the exogenous policy shock of

    the implementation of the NREGS on children‟s well being. Specifically, we explore

    whether an increase in participation of mothers in NREGS projects affects the

    educational outcomes of their children differently from that of fathers‟ participation in the

    program. If yes, we attempt to understand the mechanism through which this differential

    effect can be explained.

    While an increase in either fathers‟ or mothers‟ labour supply could improve their

    children‟s outcomes purely due to an income effect, greater labour force participation of

    mothers could impact children‟s education through two additional channels. First, women

    (including mothers) are likely to have more alternative uses of their time than men –

    market work, household chores and leisure. If children‟s time in doing household chores

    substitutes for mother‟s time then an increase in NREGS participation of mothers may

    lead to a decline in educational attainment of her children. 1 Second, mother‟s say in

    household resource allocation decisions may rise due to her higher earned income.

    Research suggests that this is likely to have a positive effect on her children‟s schooling.

    If an increase in women‟s earned income is likely to translate into greater weight being

    attached to their preferences in resource allocation decisions of the household and

    mothers prefer to invest more in their children‟s health and education (Blumberg 1988;

    Thomas 1990; Hoddinott and Haddad 1995; Quisumbing and Maluccio 2003), relative to

    1 If mother‟s and children‟s time on household chores are not substitutes and child care services

    in the market are either unavailable or unaffordable, then it is more likely that children are in

    school when mothers are at work. If children attend school more regulary due to mothers

    working, then children‟s educational outcomes might improve.

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    fathers, then we should see an improvement in child outcomes. Therefore, an increase in

    mother‟s decision-making ability within the family can have a positive impact on her

    children‟s welfare (Thomas 1990; Thomas et al. 2002). To sum, the net impact of a

    change in mother‟s participation in the labour force on her children‟s schooling depends

    on which of these two effects dominates – the substitution effect or the effect of greater

    bargaining power, holding household income constant. 2

    There exists relatively little empirical research on the impact of parental labour

    supply on children‟s time allocation, particularly in a developing country context.

    Skoufias (1993) shows that an increase in female wages in rural India reduces the time in

    school significantly for girls


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