How MNREGA reduced women’s labour force participation

By guaranteeing 100 workdays annually per household in rural India, MNREGA seeks to enhance economic security and alleviate poverty. This article shows that while the programme has successfully achieved these goals, it has inadvertently reduced rural women’s labour force participation and consequently their well-being and household bargaining power. This is because it has reduced the need for women to serve as additional workers in times of male income instability.

Women’s participation in the labour market is among the most important factors influencing their financial independence and decision-making power within the home. Research shows that when women earn their own income, they gain greater say over how resources are spent, which often leads to improved outcomes for children’s education, nutrition, and overall household well-being (Sen 1990, Kessler-Harris 2003). But in many countries, women’s ability to work is constrained by social norms or lack of suitable opportunities. There may also be economic barriers such as volatile or seasonal income opportunities, lack of childcare, limited access to safe transportation, and absence of formal job protections, especially in low-income and rural settings. This is particularly true in South Asia, where gender norms strongly discourage women from working outside the home unless absolutely necessary (Jayachandran 2021).

India is a striking case. Even as the country experienced rapid economic growth and declining fertility over recent decades – conditions that typically promote women’s work – rural married women’s labour force participation fell sharply, from about 40% in 2005 to just 30% by 2012 (World Bank, 2022). Researchers have long debated why this decline occurred.

Figure 1. Rural married women’s labour force participation in India, 2005-2012

The study and data: Measuring unintended effects

In my recent study (García 2025), I investigate how the rollout of India’s Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) has affected female labour force participation (FLFP) and women’s bargaining power within households. I use data from the 1999-2012 rounds of the Employment and Unemployment National Sample Survey (EU-NSS) and from the 2005 and 2012 waves of the Indian Human Development Survey (IHDS). The research methodology uses variation in programme rollout across districts and intensity across states, comparing outcomes in areas where the programme expanded earlier or more extensively to those where it did not. This allows for estimation of causal effects by tracking trends in otherwise similar rural areas before and after implementation.

Because MNREGA’s guarantee¹ applies at the household level, it directly influences family decisions about who works. In rural India, women often serve as “added workers”, stepping into paid work only when male earnings falter (Dean and Jayachandran 2019). I tested whether MNREGA’s guaranteed wages reduced the need for this insurance role, potentially pulling women out of the labour market.

Although the programme legally mandates that at least one-third of MNREGA work be reserved for women, and 54% of job-days between 2012 and 2021 were of women (Government of India 2022), this does not necessarily translate into higher overall labour force participation among women. Many women who work in MNREGA jobs may simply shift from other types of employment rather than newly entering the workforce.

Key findings: Gains in security but losses in women’s work

Based on NSS data, I find clear evidence that MNREGA reduced women’s participation in the labour force. Rural married women were four percentage points less likely to work outside the home following the programmes introduction, reflecting a net decline – not just a shift into MNREGA jobs from other employment.

When accounting for population shares, MNREGA explains up to 30% of the nationwide decline in rural FLFP during the study period. This effect was not due to job scarcity or women’s willingness to work but rather to households choosing to rely on guaranteed male earnings, consistent with the role of women as insurance workers.

Figure 2. Impact of MNREGA on rural married women’s labour force participation

IHDS data confirm these patterns: women’s employment declined consistently across alternative measures, while men’s participation at the extensive margin remained steady. Men, however, reduced their annual days worked, signaling that stable MNREGA income allowed them to work fewer irregular hours.

MNREGA succeeded in its main goal of boosting economic security. Monthly household consumption rose by 5-7% relative to pre-programme levels, moving from a baseline average of US$244 per person (in 2018 purchasing power parity terms). However, households reduced savings and owned fewer physical assets over time, indicating that their need to accumulate precautionary savings decreased.

Most concerning, the programme reduced women’s bargaining power: women’s share of household resources fell by nine percentage points, from 45% to 36%. A domestic independence index – constructed from IHDS questions about women’s say in household decisions – fell by one-third of a standard deviation². Additionally, women’s average BMI (body mass index) declined, suggesting worsening well-being linked to reduced financial autonomy.

Conclusion and policy implications

India’s employment guarantee programme effectively reduced poverty and improved household economic security, but unintentionally discouraged rural married women from working outside the home, thus weakening their bargaining power within the household. The programme’s household-level design substituted for women’s insurance role in times of male income instability, reinforcing social norms that keep women at home.

To better support women’s empowerment, employment guarantees ought to target individuals rather than households, giving women direct access to paid opportunities. Field et al. (2021) show that empowering women through individual control over wages increases their participation and agency. Policymakers should also seek to address social norms discouraging women’s work. India’s experience provides a valuable lesson: guaranteed jobs can improve economic security, but without careful design, they risk reinforcing the very barriers to gender equality they may be aiming to overcome.

A version of this article has previously appeared on VoxDev.

Note:

MNREGA guarantees 100 days of wage-employment in a year to a rural household whose adult members are willing to do unskilled manual work at the prescribed minimum wage.
Standard deviation is a measure used to quantify the amount of variation or dispersion of a set of values from the mean (average) value of that set.