Public Works and Social Protection
Background paper to the ERD 2010
Feridoon Koohi-Kamali, Department of Economics, John Jay College, City University of New York
Paper prepared in the framework of the European Report on Development 2010.
This paper examines the critical factors in designing successful public works programmes, paying particular attention to setting up the programme wage below the market rate in order to avoid crowding-out in job creation. The evidence examined shows, on the one hand, that failure to keep the wage rate below the market minimum attracts the non-poor to the programme, while reducing the wage rate substantially below the minimum compromises the programme impact, on the other. It explores some solutions to the programme tension between targeting public works towards the vulnerable and simultaneously reducing poverty. The paper also compares the relative advantages of the public works payment method in both cash and in-kind (food). These issues are then examined with reference to three large and well-known public work programmes: Argentina’s Jefes programme, India’s MEGS and NREGA programmes, and Ethiopia’s PSNP. The impact of food price inflation in undermining the parity between cash and grain wage rates for the PSNP participants demonstrates the importance of retaining flexibility in the method of wage payment to ensure food security.