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 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.
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| Main Authors: | , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2005-06
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| 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 https://hdl.handle.net/10986/8188 |
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dig-okr-1098681882024-08-08T17:22:57Z 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 https://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 application/pdf text/plain World Bank, Washington, DC |
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| 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 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 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? |
| 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. |
| topic_facet |
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 |
| 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 |
2005-06 |
| url |
http://documents.worldbank.org/curated/en/2005/06/5866369/guaranteed-living-wage-good-anti-poverty-policy https://hdl.handle.net/10986/8188 |
| work_keys_str_mv |
AT murgairinku isaguaranteedlivingwageagoodantipovertypolicy AT ravallionmartin isaguaranteedlivingwageagoodantipovertypolicy |
| _version_ |
1807155540182171648 |