Is Workfare Cost-effective against Poverty in a Poor Labor-Surplus Economy?

Workfare has often seemed an attractive option for making self-targeted transfers to poor people. But is this incentive argument strong enough in practice to prefer unproductive workfare to even untargeted cash transfers? A nonparametric survey-based method is used to assess the cost-effectiveness of a large workfare scheme in a poor state of India with high unemployment. Forgone earnings are evident but fall short of market wages. For the same budget, unproductive workfare has less impact on poverty than either a basic-income scheme or transfers tied to the government's assignment of ration cards. The productivity of workfare is thus crucial to its justification as an antipoverty policy.