The jobs illusion: what public works programs can and cannot do

Across the world, policymakers are asking a seemingly simple question: what does actually work to create more and better jobs? With jobs now at the center of the World Bank Group's development strategy, this focus is both timely and necessary because jobs are not just an outcome of prosperity, they are a path to it

This calls for a fresh look at what the evidence says about public works programs — also known as: workfare or cash‑for‑work. These programs are among the most prominent social protection instruments in low‑ and middle‑income countries, spanning rural employment guarantees, national safety nets, and large-scale urban youth programs across Africa, Asia, and Latin America.
 

Because they involve paid work, public works are often described as programs that “create jobs.” But do they?

Drawing on a comprehensive review of the global evidence published in the 2026 MIT Handbook of Social Protection, we argue that, in most contexts, the answer is no. Public works are not primarily engines of job creation. Their main function is to provide income support, insurance, and redistribution. While they operate through labor‑market channels, they rarely expand employment overall. In a policy environment increasingly focused on jobs, that distinction matters.
 

What public works are designed to do

Public works programs typically offer temporary, low‑skill employment at administratively set wages, often below prevailing market rates. Their defining feature is the work requirement. This design is intentional: in settings where governments lack reliable information on household income, requiring beneficiaries to perform physically demanding work helps target benefits toward poorer households. Workers with better outside options are less likely to participate, while poorer or underemployed workers self‑select in. This self-targeting logic is what makes public works attractive to governments operating under fiscal constraints and imperfect information.
 

What the evidence shows

Most of what we know comes from large national programs and policy‑relevant pilots implemented across very different labor‑market settings — from chronically food-insecure rural areas and post-conflict zones to rapidly urbanizing cities and economies in crisis.

The evidence converges on three practical questions:

1. Do public works raise participants’ employment?
2. What are their effects on wages and private‑sector jobs?
3. Do impacts persist after programs end?
    

Do public works increase employment for participants? Sometimes, but not systematically

Where surplus labor or seasonal underemployment is widespread, public works can increase total hours worked. In tighter labor markets, participation often displaces other work rather than adding to it. Even when participants earn wages, net income gains are typically smaller than headline wages suggest, because beneficiaries often give up other income‑earning activities to participate.
 

Do public works increase employment overall? Only under specific conditions

Public works do not usually increase labor demand - they reallocate workers across employers or sectors. In competitive labor markets, public works tend to raise wages while leaving total employment unchanged. Where employers have market power, public works can increase both wages and private employment by improving workers' outside options. In severely slack labor markets — such as during economic crises — they may temporarily absorb underemployed workers, but without lasting effects on total employment.
 

The real strength of public works: redistribution and insurance

By setting a wage floor and offering workers a credible outside option, public works generally achieve pro‑poor targeting and can push up wages across the broader labor market — often benefiting workers who do not participate directly. These wage spillovers can account for a substantial share of total poverty reduction in contexts where casual labor markets are prevalent. Public works also play an important insurance role. Programs have demonstrated their value during droughts, food‑price shocks, and the COVID‑19 crisis, scaling up rapidly when households needed support most. In fragile and post‑conflict settings, they can provide short‑term income even when labor markets have largely broken down.
 

What about skills and long‑term impacts?

Skills gains, by contrast, tend to be small and often fade after programs end. Productive assets created by public works rarely show clear impacts on productivity at scale, and long‑run employment effects are weak or statistically insignificant in most studies. This does not mean public works fail. Their comparative advantage lies in short‑term protection and redistribution, not in structural transformation.
 

What does this mean for policymakers?

The core insight from the evidence is that public works are a social protection tool, not a job creation tool. Treating them as the latter risks misallocating resources and setting programs up to fail against the wrong benchmark. For policymakers designing or evaluating public works, three questions are worth asking upfront.

• What problem are we trying to solve? Is it poverty, vulnerability, low wages, or unemployment?
• How does the local labor market function, and will a work requirement help or hinder targeting?
• And are there alternative instruments, such as direct cash transfers, that could achieve similar protective goals at lower cost?

Beyond program design, the broader implication is about policy sequencing. Public works can play a meaningful role as complements to a jobs strategy, not a substitute. Where poverty reduction through job-led growth is the goal, the policy toolkit needs to reach further than counting temporary jobs.

^{The views expressed in the Let’s Talk Development blog are solely those of the author(s).}