The Mahatma Gandhi National Rural Employment Guarantee Act in India was the ?rst step by the government to provide social security torural workers, who constitute a signi?cant share of the labor force, and 93% of whom work for the informal sector. This paper evaluates the potential e¤ects of this program on aggregate labor market outcomes, in particular its e¤ects on urban labor markets within the context of a model of a segmented labor market with search frictions and heteroge-neous workers. I calibrate the model using pre-program data, and then use it to forecast the potential impact of the program. In line with the data, the model predicts that rural sector employment increased by 3 per- cent, while that in the urban informal sector decreased by 8 percent as unskilled labor in urban areas move back to rural areas in response to the bene?ts of the program. Consistent with observed patterns in the data, the model also predicts a fall in urban formal sector employment, generated by complementarities between the outputs of the two sectors. Indeed, employment in the formal sector falls by 2 percent, leading to an increase in urban unemployment.