Is the impact of NREGS on farm wages more nuanced?

Livemint points to an interesting finding from a study of farm wages and farm productivity that questions the conventional wisdom that the National Rural Employment Guarantee Scheme (NREGS) has increased rural wages and affected agriculture production. Kanika Mahajan writes,

The annual wage growth rate for men working in agriculture being 3.1% in the most recent period (2004-09) compared with just 1.8% in the previous period (1999-2004). The difference is even starker for women at 5% annual growth for 2004-2009 and a meagre 1.2% for 1999-2004... But these figures cannot be analysed in isolation. They must be looked at under the light of changing agricultural conditions across the two periods... the increase in foodgrain yield in 2004-2009 of 2.5% per year, while it was at a record low level of 0.1% per year during 1999-2004... The net increase in men’s agricultural wages (subtracting the foodgrain yield growth rate from real agricultural wage growth rate) stands at 1.7% for the period of 1999-2004 and 0.6% for 2004-2009. Thus, 2004-2009 effectually experienced a lower rate of increase in agricultural wages once the growth rate in yield is netted out... at the all India level, growth in net female agricultural wages is a modest 2.4% in 2004-2009 in comparison with the 1.1% in the 1999-2004.

So what is the story? Why has agriculture productivity increased during the latest period? What's the contribution of NREGS to this, if any? Is the increase in farm wages concealed somewhere? A satisfactory assessment of these trends will require more data and their analysis.

But as the author herself indicates, one plausible mechanism would be through the assets created under the NREGS. A large share of NREGS works were irrigation related ones like water harvesting structures and field channels. These works, even if semi-permanent and of poor quality, are certain to have increased the water availability for significant acreage. Is this showing up in the productivity figures?

In any case, if this is true, it only means that farm productivity has increased due to better inputs and not increased labour productivity. In fact, the lower increase in wages in the latest period could even point to a slowdown or even reduction in labour productivity. Is there a causal role for NREGS in this trend? Is it the case that the more productive workers have preferred the more remunerative NREGS work to farm labour?  Further, the figures also does not say anything about the non-farm rural wages, leave alone wages in other areas.

Update 1 (1/12/2013)

Livemint has this nice graphic on rise of rural wages across India.


While it is difficult to draw causal relationship with NREGS, its impact is undoubted. Will be interesting to examine the correlation between the penetration of NREGS (say, in terms of average mandays of rural jobs created per person) and the rise in wages. 

Morality Vs economics - the debate surrounding cross-national adoptions?

The controversy surrounding pop star Madonna's attempt to adopt a second child from Malawi, is only the latest episode in the long history of events that have pitted morals and values against economic utility and rational considerations. It has been argued that what is economically (or financially) beneficial is often morally, ethically, and/or culturally repugnant.

Briefly the facts of the case. Following an intense debate involving opposition from child rights activists, a court in Malawi had rejected Madonna's efforts to adopt an orphan three year old girl, Chifundo James, because of a requirement that prospective parents be resident in the country for 18 to 24 months. Interestingly, the same residency rule was waived in 2006, when Madonna was allowed to take her adopted son, David, from the same orphanage, to London before his adoption was finalized in 2008.

Global opponents argue that such adoptions of children in developing countries by parents in rich countries, will encourage trafficking. They also claim that such adoptions transplant children from their cultural moorings, thereby dislocating them and leaving them rootless in alien cultures. Domestic opponents argue that such adoptions create a picture that the state has failed to care for children and therefore that orphans should be taken away from their communities to other countries.

All the aforementioned objections have answers. Trafficking can be controlled if the adoptions are carried out within the framework of both national and international regulations. The cultural dislocation advocates would do well to remember that millions of immigrant children are today growing up in alien cultures, in simlarly "rootless" cicumstances, where assimilation is surely a challenge, though not unsurmountable. The nationalist arguement does not carry any conviction, and if anything, should spur the respective local governments to get their acts together.

Ideological and blanket opposition to such complex issues are commonplace, and more often does more harm than good. It ignores the reality of adoptions, leaves the country without an appropriate regulatory framework to police adoptions, and drives adoptions into the underground market (or high profile one-off adoptions like the present case).

Consider the simple facts in the instant case - the child is an orphan (and this is important), is living in a poor African country (where presumably the chances of a good life for the child is bleak), and the adopter is a rich parent. All things being equal, in purely probablistic terms, the chances of the child having a more comfortable life, both materially and metally, is clearly higher if she is adopted. So what is the fuss about?