Study blames NREGA for 2.4% rise in school dropout of adolescents, especially girls

A new research work, which would which is likely to sound music to Prime Minister Narendra Modi’s chosen economic advisors, especially Niti Ayog vice-chairman Arvind Panagariya, says that the former UPA government’s flagship programme National Rural Employment Guarantee Scheme (NREGS), has had a negative impact on school going children, especially in the age-group 13-17.
The study, titled “Workfare and Human Capital Investment: Evidence from India”, by Manisha Shah and Bryce Millett Steinberg for the Bonn-based Institute for the Study of Labour (IZA), an independent nonprofit organization supported by the Deutsche Post Foundation, has said that in the age-group 13-17 the school dropout has been around 2.4 per cent.
Pointing out that there is a simultaneous diversion of the children in this age group to “productive work” to the tune of 2.8 per cent, the study says, it also finds that “adolescent girls are more likely to substitute for their mothers in domestic work, while boys are more likely to work outside the home for pay.”

They underline, "Girls, rather than gaining market experience and their own earnings like their male counterparts, are substituting for their mothers at home. Based on our estimates, for every 20 women induced into the labor force by NREGS, between 1.2 and 4 adolescent girls may have dropped out of school, nearly all of them to go into full-time domestic work in their parents’ homes.”
At the same time, the study says, “The results for younger children are more mixed. We find little effect of overall exposure to NREGS for primary school children (aged 5-12). Additional years of exposure have a slightly negative (for children aged 9-12), or slightly positive (for children aged 5-8) effect on human capital investment.”
At the same time, the authors says, “We do find that NREGA exposure from age 2-4 significantly improves test scores and the likelihood that these children will enroll and be on track in school when measured at age 5, suggesting the increased income due to NREGS might play a positive role for younger children in the household.”
Using National Sample Survey (NSS) data rounds 60, 61, 62, 64 and 66, which was collected between 2003 and 2009 by the Government of India’s Ministry of Statistics, the authors use well-known elite NGO Pratham’s “Annual Survey of Education Report” (ASER) for each of these years in order to find a correlation between NREGS and school dropout.
Based on NSS-ASER correlation, the study says, “Each year of exposure to NREGS during adolescence decreases school enrollment by 1.7 percentage points and math scores by about 2 per cent of a standard deviation.” It adds, “For total math score, the decrease is 10% of a standard deviation per year of exposure.”
Giving reason for their conclusion, the authors say, “NREGS increases the opportunity cost of time for families, which decreases time intensive human capital investments.” They add, “The increase in the agricultural wages due to NREGS is about 5 per cent. If families expect the program to last for many years, it is possible that they chose to reduce their investment in human capital.”

The authors comment, “It is worth noting that NREGS was designed with the intent to both lower poverty and increase female empowerment by increasing women’s labour force participation and earnings potential. These results suggest, however, that it could be unintentionally decreasing the future earnings potential of some of its beneficiaries by inducing them to drop out of school earlier than they otherwise would have.”