National Council of Applied Economic Research (NCAER)
Abstract
Using unique panel data assembled from official reports, we study the impact of social audits on Mahatma Gandhi National Rural Employment Guarantee Act delivery in Andhra Pradesh. Within a dynamic framework where beneficiaries, auditors, and transgressors interact and learn, we find a positive but insignificant impact of audits on employment generation and a modest decline in the leakage amount per labor-related irregularity: outcomes with high beneficiary stakes. This occurs alongside an increase in material-related irregularities with lower beneficiary stakes. Although we find evidence suggestive of beneficiary “learning” and of audit effectiveness in detecting irregularities, repeated audits did not deter irregularities. This highlights the need for a time-bound process where transgressors are punished and responsibilities for follow-up of social audit findings laid out and credibly enforced
