MNREGA has led to wage hike: Oxford study

The Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) has increased agricultural wages by 5.3 per cent across Indian since it was introduced in 2006, a study by the Oxford University has found.

The study also involved researchers from the Institute for Social and Economic Change, Bangalore, the university said in a statement.

The study examined monthly wage data for 249 districts in 19 states between 2000 and 2011 compiled by the Union Agriculture ministry and found that NREGA boosted wage rates by 5.3 per cent on an average.

This suggests that the NREGA benefits not only those directly employed by the scheme but all wage earners in the agricultural sector, the statement said.

"The higher wage rates make the very poorest better off, while landowners and other rural employers face higher labour costs," said Dr Erlend Berg of the university's Department of Economics.

"However, this objection does not stop governments around the world from trying to impose minimum wages rates, another market intervention that aims to favour workers while increasing costs for employers. The Oxford study shows that public works programmes provide governments with an additional mechanism that can influence wage rates in the rural unskilled labour market."

Between 2008 and 2010, NREGA, on an average, generated 3.3 days of employment per year for each rural inhabitant in a district and each extra day per capita per year raised wages by 1.6 per cent, the study said.

The researchers argue that there are two possible ways in which a large-scale public employment programme like NREGA can influence market wages — one, extra competition among workers drives up the price of their services, and, two, infrastructure built under the scheme may increase rural productivity, and therefore wages, more generally.

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