Beyond the short-term consumption benefits from program-related resource transfers, the predictable nature of such labor demand could affect agricultural outcomes and productivity in two ways. On the one hand, MNREGS could increase investment and intensity of cultivation, allowing farmers to use input levels that are closer to the optimum, or to adopt crop portfolios with higher risk-return profile. On the other hand, assets created through MNREGS works, especially if related to irrigation or other types of land improvement, should increase productivity and reduce production risk directly. Evidence on productionrelated impacts of MNREGS is limited, partly due to data challenges.<sup>10</sup> As a key feature of the program, in contrast to, for example, a straight cash transfer scheme, is the construction of productive infrastructure, this is a central issue for assessing its impact.<sup>11</sup> One category of studies assesses the extent to which availability of the program allows farmers to take on higher levels of production risk. For example, district level Agricultural Input Survey (ACIS) data with a RD framework between phases I and II suggest MNREGS-induced wage increases increased the likelihood of mechanization by 10-20 points in the short term (Bhargava 2014). This could raise the possibility that, in the longer term, program-induced wage increases may prompt a reduction in labor demand. Repeated cross sections based on national NSS data with a RD design suggest that farmers exposed to NREGS make riskier crop choices (Ragunathan and Hari 2014). Panel data from AP point towards a modest MNREGSinduced shift from traditional towards commercial crops such as cotton (Gehrke 2014).

To assess whether higher levels of risk-taking are due to farmers expecting MNREGS to continue in the foreseeable future or a reduction in risk due to program-related works (e.g. in irrigation), data on the amount, type, and quality of the structures constructed under the program are needed. The only study that, to our knowledge, links outcomes to nature and quality of MNREGS works, finds higher that quality of works under MNREGS led to significant, though quantitatively small (0.5 to 0.8 points) increases in the share of cash crops grown (Shah 2013).

To explore this further, we complement, for a subset of the villages in our sample, household-level data on production and labor supply with information on the quantity of MNREGS employment overall vas that in irrigation which would be expected to yield benefits in the short term. A coefficient on the latter that is at least as large and significant as the former would provide circumstantial evidence for infrastructure constructed by MNREGS having a significant short-term productivity effect whereas an insignificant or small effect would point towards observed productivity effects being driven by resource transfers instead.

# **3. Estimation strategy and descriptive statistics**

> 10 Desai _et al._ (2015) report completion rates of at most 51%. To our knowledge the only study exploring this aspect in more detail is Shah (2013). 11 Ideally, assets (e.g. small irrigation) generated under the program would simultaneously reduce the risk of moving into higher value crops.

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