Employment, Income and Labour Supply Decision of Rural Households : An Economic Analysis of MGNREGS in Tamil Nadu

In India, Mahatma Gandhi National Rural Employment Guarantee Scheme (MGMGNREGS) is one of the major rural development programmes. It provides guaranteed employment to the rural households for 100 days in a year. This paper has attempted to find out the employment status, income and labour supply decision of the participants and non-participants of MGNREGS in Tamil Nadu. It has also studied the household nutritional security of these households. The study has revealed that the number of migrants in the family, number of livestock units owned, and number of person-days employed in agriculture, non-agriculture and MGNREGS are significantly influenced by the household income of the participants and non-participants of MGNREGS. The analysis of household food-security has shown that the expenditure for all commodities, viz. leisure, cereals, pulses, oils, fruits & vegetables, milk, chicken and fish are positive and significant in the case of MGNREGS participants, whereas the expenditure variable is significant only for two commodities, viz. cereals and oils in case of MGNREGS non-participants. It shows that the MGNREGS participants consume more high-value commodities like milk, chicken and fish, as compared to MGNREGS non-participants. The labour supply decision of sample respondents has shown that the elasticity of labour supply with respect to wage rate is more than one in both participants and non-participants of MGNREGS, indicating that an one per cent increase in wage rate increases labour supply by 1.92 per cent and 2.36 per cent, respectively. In addition, as the number of dependents increases, the household increases labour supply to derive additional income to meet the increased household expenditures. An interesting and encouraging observation is that the scheme has reduced the migration of people from rural to urban areas.