India’s National Rural Employment Guarantee Scheme (NREGS) has been hailed as one of the country’s most creative social initiatives. Since the program was begun only recently (in 2004-05) there is a need to assess its impact on households not just in one year but over time. To the best of our knowledge there are no studies of the latter kind. Using a unique panel data set for 2007-08 and 2009-10 for the Indian state of Rajasthan this paper analyzes the transitions into and out of the National Rural Employment Guarantee. It models the impact of such transitions on earnings of workers as well the determinants of such transitions. Several policy conclusions are also advanced.