Micro-politics of social protection: examining the effectiveness of 'employment rights' for the informal sector in rural Maharashtra.

The analysis of public works programmes using the theory of real options argues that the effectiveness of these programmes can be studied by examining the switches the workers make between public works and other labour market activities. The wage rate between these two options is the focus of the analysis under the theory of real options. This paper critically examines the applicability of the econometric methods of the theory of real options by studying the same public works programmes through a local management perspective using a case-study approach. Local elites enjoy 'informal ownership' of public works programmes, and the rights of the poor are therefore shrouded in micro-politics. Besides, for a large number of the poorest people who are trapped in a vicious cycle of debt and seasonal migration, rights and options are foregone. The power of the local elites is discounted heavily in the approach of theory of real options. Relying on such outcome variables—which are manufactured by the local elites—can mislead policy decisions. [ABSTRACT FROM AUTHOR]