This paper presents a model of the labor market where public workfares increase private wages by reducing labor supply. In a dynamic setting, we show that when wages are downwardly rigid, forward-looking employers optimally compress wage increases in response to intertemporal variability in the level of program implementation. The model generates two key predictions: greater variability in program provision results in a larger compression of wage increases, and compression of wage increases is more severe under low inflation. We empirically verify these predictions using data from two large workfares from India.

中文翻译：

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公共工作票价的供应差异

本文提出了一个劳动力市场模型，其中公共工作票价通过减少劳动力供应来增加私人工资。在动态的情况下，我们表明，当工资下降时，前瞻性雇主会根据计划实施水平的跨时变化来最佳地压缩工资增长。该模型产生两个关键的预测：计划提供的更大可变性导致工资增长的更大压缩，而在低通胀下工资增长的压缩更为严重。我们使用来自印度的两个大型工作人员的数据，以经验方式验证了这些预测。