Is a Guaranteed Living Wage a Good Anti-Poverty Policy?

Minimum wages are generally thought to be unenforceable in developing rural economies. But there is one solution - a workfare scheme in which the government acts as the employer of last resort. Is this a cost-effective policy against poverty? Using a microeconometric model of the casual labor market...

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Main Authors:	Murgai, Rinku, Ravallion, Martin
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ADMINISTRATIVE COSTS AUDITS CASH TRANSFERS CONSUMPTION EXPENDITURES COST EFFECTIVENESS COUNTERFACTUAL DEMOGRAPHICS DISCLOSURE EGS ELASTICITIES EMPLOYMENT HOUSEHOLD CONSUMPTION HOUSEHOLD INCOME INCOME INEQUALITY INFLATION LABOR FORCE LABOR INPUTS LABOR MARKETS LABOR SUPPLY MINIMUM WAGES PER CAPITA CONSUMPTION POLICY DISCUSSIONS POLICY MAKERS POLICY RESEARCH POOR POVERTY GAP INDEX POVERTY LINE POVERTY LINES POVERTY MEASURES PRIVATE SECTOR PRODUCTIVITY PUBLIC WORKS RURAL POVERTY SELECTION BIAS SOCIAL SERVICES SQUARED POVERTY GAP INDEX TARGETED TRANSFERS TARGETING TRANSFER PROGRAMS UNEMPLOYMENT WAGE RATES
Online Access:	http://documents.worldbank.org/curated/en/2005/06/5866369/guaranteed-living-wage-good-anti-poverty-policy http://hdl.handle.net/10986/8188

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spelling	okr-10986-81882021-04-23T14:02:43Z Is a Guaranteed Living Wage a Good Anti-Poverty Policy? Murgai, Rinku Ravallion, Martin ADMINISTRATIVE COSTS AUDITS CASH TRANSFERS CONSUMPTION EXPENDITURES COST EFFECTIVENESS COUNTERFACTUAL DEMOGRAPHICS DISCLOSURE EGS ELASTICITIES EMPLOYMENT HOUSEHOLD CONSUMPTION HOUSEHOLD INCOME INCOME INEQUALITY INFLATION LABOR FORCE LABOR INPUTS LABOR MARKETS LABOR SUPPLY MINIMUM WAGES PER CAPITA CONSUMPTION POLICY DISCUSSIONS POLICY MAKERS POLICY RESEARCH POOR POVERTY GAP INDEX POVERTY LINE POVERTY LINES POVERTY MEASURES PRIVATE SECTOR PRODUCTIVITY PUBLIC WORKS RURAL POVERTY SELECTION BIAS SOCIAL SERVICES SQUARED POVERTY GAP INDEX TARGETED TRANSFERS TARGETING TRANSFER PROGRAMS UNEMPLOYMENT WAGE RATES Minimum wages are generally thought to be unenforceable in developing rural economies. But there is one solution - a workfare scheme in which the government acts as the employer of last resort. Is this a cost-effective policy against poverty? Using a microeconometric model of the casual labor market in rural India, the authors find that a guaranteed wage rate sufficient for a typical poor family to reach the poverty line would bring the annual poverty rate down from 34 percent to 25 percent at a fiscal cost representing 3-4 percent of GDP when run for the whole year. Confining the scheme to the lean season (three months) would bring the annual poverty rate down to 31 percent at a cost of 1.3 percent of GDP. While the gains from a guaranteed wage rate would be better targeted than a uniform (untargeted) cash transfer, the extra costs of the wage policy imply that it would have less impact on poverty. 2012-06-15T19:41:29Z 2012-06-15T19:41:29Z 2005-06 http://documents.worldbank.org/curated/en/2005/06/5866369/guaranteed-living-wage-good-anti-poverty-policy http://hdl.handle.net/10986/8188 English Policy Research Working Paper; No. 3640 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia India
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ADMINISTRATIVE COSTS AUDITS CASH TRANSFERS CONSUMPTION EXPENDITURES COST EFFECTIVENESS COUNTERFACTUAL DEMOGRAPHICS DISCLOSURE EGS ELASTICITIES EMPLOYMENT HOUSEHOLD CONSUMPTION HOUSEHOLD INCOME INCOME INEQUALITY INFLATION LABOR FORCE LABOR INPUTS LABOR MARKETS LABOR SUPPLY MINIMUM WAGES PER CAPITA CONSUMPTION POLICY DISCUSSIONS POLICY MAKERS POLICY RESEARCH POOR POVERTY GAP INDEX POVERTY LINE POVERTY LINES POVERTY MEASURES PRIVATE SECTOR PRODUCTIVITY PUBLIC WORKS RURAL POVERTY SELECTION BIAS SOCIAL SERVICES SQUARED POVERTY GAP INDEX TARGETED TRANSFERS TARGETING TRANSFER PROGRAMS UNEMPLOYMENT WAGE RATES
spellingShingle	ADMINISTRATIVE COSTS AUDITS CASH TRANSFERS CONSUMPTION EXPENDITURES COST EFFECTIVENESS COUNTERFACTUAL DEMOGRAPHICS DISCLOSURE EGS ELASTICITIES EMPLOYMENT HOUSEHOLD CONSUMPTION HOUSEHOLD INCOME INCOME INEQUALITY INFLATION LABOR FORCE LABOR INPUTS LABOR MARKETS LABOR SUPPLY MINIMUM WAGES PER CAPITA CONSUMPTION POLICY DISCUSSIONS POLICY MAKERS POLICY RESEARCH POOR POVERTY GAP INDEX POVERTY LINE POVERTY LINES POVERTY MEASURES PRIVATE SECTOR PRODUCTIVITY PUBLIC WORKS RURAL POVERTY SELECTION BIAS SOCIAL SERVICES SQUARED POVERTY GAP INDEX TARGETED TRANSFERS TARGETING TRANSFER PROGRAMS UNEMPLOYMENT WAGE RATES Murgai, Rinku Ravallion, Martin Is a Guaranteed Living Wage a Good Anti-Poverty Policy?
geographic_facet	South Asia India
relation	Policy Research Working Paper; No. 3640
description	Minimum wages are generally thought to be unenforceable in developing rural economies. But there is one solution - a workfare scheme in which the government acts as the employer of last resort. Is this a cost-effective policy against poverty? Using a microeconometric model of the casual labor market in rural India, the authors find that a guaranteed wage rate sufficient for a typical poor family to reach the poverty line would bring the annual poverty rate down from 34 percent to 25 percent at a fiscal cost representing 3-4 percent of GDP when run for the whole year. Confining the scheme to the lean season (three months) would bring the annual poverty rate down to 31 percent at a cost of 1.3 percent of GDP. While the gains from a guaranteed wage rate would be better targeted than a uniform (untargeted) cash transfer, the extra costs of the wage policy imply that it would have less impact on poverty.
format	Publications & Research :: Policy Research Working Paper
author	Murgai, Rinku Ravallion, Martin
author_facet	Murgai, Rinku Ravallion, Martin
author_sort	Murgai, Rinku
title	Is a Guaranteed Living Wage a Good Anti-Poverty Policy?
title_short	Is a Guaranteed Living Wage a Good Anti-Poverty Policy?
title_full	Is a Guaranteed Living Wage a Good Anti-Poverty Policy?
title_fullStr	Is a Guaranteed Living Wage a Good Anti-Poverty Policy?
title_full_unstemmed	Is a Guaranteed Living Wage a Good Anti-Poverty Policy?
title_sort	is a guaranteed living wage a good anti-poverty policy?
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/06/5866369/guaranteed-living-wage-good-anti-poverty-policy http://hdl.handle.net/10986/8188
_version_	1764407449023938560

Is a Guaranteed Living Wage a Good Anti-Poverty Policy?

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