Skill Development under Rural Workfare Programs: A Technology Based Argument

Welfare programs as a policy instrument for the purpose of poverty alleviation have been mostly criticized for the distortionary effects that they create in the functioning of the labor market. To avoid, a slack in labor supply and to ease the pressure thus created on the state finances, alternative workfare policies have been implemented across the world. But the nature of work or employment provided under such policies has been largely mechanical. So, to take better advantage of these employment-generating programs, providing on the job training to enhance the skills of the participants as well as to improve the quality of the infrastructure thus generated can be a better policy to implement. In this paper, using a micro-theory framework in the agricultural sector, it has been shown that such a policy if well targeted can lead to higher individual agricultural output as well as higher aggregate productivity in the aggregate output of the sector. The effect is more striking in the presence of technological progress.