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  5. Farm Labor, Immigration, Wages, and Policy Impacts
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Farm Labor, Immigration, Wages, and Policy Impacts

Paper Session

Sunday, Jan. 7, 2024 10:15 AM - 12:15 PM (CST)

Grand Hyatt, Seguin B
Hosted By: Agricultural and Applied Economics Association
  • Chair: John Pender, U.S. Department of Agriculture

Domestic Farm Employment and the H-2A Visa Program

Marcelo Castillo
,
USDA Economic Research Service

Abstract

Many indicators suggest a potential decline in the domestic supply of farm labor, which is often presumed to have driven agricultural employers towards an increased reliance on the H-2A visa program. Because hiring H-2A workers is generally more expensive than employing domestic farmworkers, it remains to be seen if reductions in domestic farm employment could be fully offset by increased H-2A employment. In this study, we first examine whether a recent downturn in the employment of U.S.-based Mexican-born workers is responsible for the recent rise in H-2A employment. Subsequently, we quantify the extent to which changes in domestic farm employment impact the employment of H-2A guest workers. Our results suggest that a structural shift in the domestic farm labor market around 2011 may be responsible for the recent increase in H-2A employment. However, the rise in H-2A worker employment has not fully compensated for the decrease in domestic farm employment.

Spillover Effects of Minimum Wages in Agriculture

Zachariah Rutledge
,
Michigan State University

Abstract

The Adverse Effect Wage Rate (AEWR) is a minimum wage that must be paid to non-immigrant agricultural guest workers working in the United States under the H-2A visa program. The AEWR was established as a mechanism to prevent domestic farmworker wage depression resulting from an increase in the employment of foreign workers, but agricultural employers argue that the AEWR influences the wages of all other workers and that it is generally too high. In this paper, we provide empirical estimates of the effects of changes in the AEWR on the wages of domestic farmworkers using an instrumental variables approach with a fixed-effects panel regression model. Our econometric analysis indicates that higher AEWRs cause the wages of domestic farmworkers to rise. We find an elasticity of domestic wages with respect to the AEWR about 0.3 nationwide and about 0.5 in the top 10 H-2A states. Our results indicate that a policy that would freeze the AEWR for one year would reduce the wage growth of domestic employees by about $500 million.

The Value of the U.S. Farm Workers’ Legal Status: A Hedonic Price Analysis

Sun Ling Wang
,
USDA Economic Research Service

Abstract

While many researchers agree that a wage differential exists between authorized and unauthorized workers it is unclear what the shadow value of farm worker legal status is or the extent to which employers are willing to pay for an authorized farm worker. Since differences in earnings are affected by the demographic characteristics, we employ a hedonic framework to estimate the shadow price of the legal status of farm workers using data on crop farm worker wages from the National Agricultural Workers Survey (NAWS) spanning the period of 1989-2021. Our explanatory variables include farm worker experience, gender, education level, language skill, and legal status while controlling for employer type, job tasks (e.g., harvest work), geographic region and time. An econometric problem associated with the hedonic wage equation is that the workers’ employer type—hired by grower or contractor-- may also be correlated with an error term in the wage equation. To correct for possible sample selection bias, we employ the hazard technique suggested by Heckman (1979). This paper uses the most recently available data to provide current evidence about farm workers’ wage determinants with a focus on legal status. The preliminary results show that while legal status contributes significantly to the wage differences, it is not the major factor. Higher educational attainment, farm work experience, better English-speaking skills, and work in field crop or horticultural production have significant and positive impacts on the wage rate. Legal status is associated with more than 3% higher wages on average. However, there are also structural changes on the legal status effect over a thirty-year time span under potential policy influences. After taking into account the composition shift in demographic characteristics, the quality-adjusted hourly earnings still grew nearly three times (in nominal terms) over the past three decades.

U.S. Employment Exposure to Agricultural Trade Policy

Diane Charlton
,
Montana State University

Abstract

Literature examining the effects of changes in trade agreements and import competition on U.S. employment and wages has focused solely on non-farm industries, and the agricultural sector has mostly been ignored. In this paper, we propose a method for measuring worker exposure to changes in agricultural tariffs using a newly developed county-level dataset of employment shares by crop and livestock type. As an example, we apply the method to illustrate the spatial concentration of U.S. county-level employment-weighted exposure to changes in agricultural and non-agricultural tariffs caused by the North American Free Trade Agreement (NAFTA). These detailed data permit investigation of crop-, livestock-, and non-farm product-specific natural and market-driven shocks on employment and wage outcomes across U.S. counties. We show that reductions in U.S. tariffs imposed on imports from Mexico and Canada were much larger for crops than non-farm goods on average, and worker exposure to declines in foreign import tariffs on U.S. crops and livestock were even larger in magnitude. Based on these findings, we suggest that research should consider both exposure to farm and non-farm tariffs on imports that increase competition in domestic markets and exposure to foreign import tariffs that increase U.S. competitiveness in foreign export markets.
JEL Classifications
  • A1 - General Economics