Socioeconomic Impacts of India's Rural Job Guarantee Program: Evidence From <scp>MGNREGA</scp>

ABSTRACT As the world's largest employment guarantee scheme, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) serves as a crucial policy experiment in addressing rural poverty and unemployment. While studies have examined its varied impacts on asset creation, financial inclusion, and women's empowerment, a comprehensive understanding of its socioeconomic effects at the household and community levels remains crucial for evaluating such large‐scale public employment programs. This study aims to evaluate the socioeconomic impact of the MGNREGA, a large‐scale government‐sponsored job guarantee scheme. Specifically, we examine the effectiveness of the MGNREGA in alleviating poverty, enhancing consumption, and reducing income inequality. This study utilizes nationally representative longitudinal data from the Indian Human Development Survey (IHDS) to conduct the empirical analysis. We employ logit estimations with district fixed effects to examine the socioeconomic impact of the MGNREGA. The results of the study demonstrate that MGNREGA participation has a significant effect on poverty alleviation and improving household consumption. Furthermore, the results suggest that MGNREGA participation contributes to reducing income inequality at the community level. This study contributes empirical evidence to the broader discourse on government‐sponsored large‐scale job guarantee schemes as policy tools for addressing socioeconomic challenges at both the household and community levels. This is among the first studies that analyze the impact of MGNREGA at the community level using a dataset comprising over 1400 villages across 29 states in India.