1932

Abstract

The labor supply response to agricultural wages is critical to the viability of crop production in high-income countries, which hire a largely foreign farm work force, as well as in low-income countries, where domestic workers move off the farm as the agricultural transformation unfolds. Modeling agricultural labor supply is more challenging than modeling the supply of other agricultural inputs or of labor to other sectors of the economy owing to unique features of agricultural production and farm labor markets. Data and econometric challenges abound, and estimates of agricultural labor supply elasticities are sparse. This review explains the importance and challenges of modeling farm labor supply and describes researchers’ efforts to address these challenges. It summarizes estimates of agricultural labor supply elasticities over the last 80 years, provides insights into variation in these estimates, identifies priority areas for future research, and reviews the most influential empirical work related to this important topic.

Loading

Article metrics loading...

/content/journals/10.1146/annurev-resource-101620-080426
2021-10-05
2024-03-28
Loading full text...

Full text loading...

/deliver/fulltext/resource/13/1/annurev-resource-101620-080426.html?itemId=/content/journals/10.1146/annurev-resource-101620-080426&mimeType=html&fmt=ahah

Literature Cited

  1. Adulavidhaya K, Kuroda Y, Lau L, Lerttamrab P, Yotopoulos P. 1979. A microeconomic analysis of the agriculture of Thailand. Food Res. Inst. Stud. 17:79–86
    [Google Scholar]
  2. Adulavidhaya K, Kuroda Y, Lau L, Yotopoulos P. 1984. The comparative statics of the behavior of agricultural households in Thailand. Singap. Econ. Rev. 29:67–96
    [Google Scholar]
  3. Altonji JG. 1986. Intertemporal substitution in labor supply: evidence from micro data. J. Political Econ. 94:3176–215
    [Google Scholar]
  4. Alvarez-Cuadrado F, Poschke M. 2011. Structural change out of agriculture: labor push versus labor pull. Am. Econ. J. Macroecon. 3:3127–58
    [Google Scholar]
  5. Arslan A, Taylor JE. 2012. Transforming rural economies: migration, income generation and inequality in rural Mexico. J. Dev. Stud. 48:81156–76
    [Google Scholar]
  6. Bargain O, Peichl A. 2016. Own-wage labor supply elasticities: variation across time and estimation methods. IZA J. Labor Econ. 5:101–31
    [Google Scholar]
  7. Barnum H, Squire L. 1978. Technology and Relative Economic Efficiency. Oxf. Econ. Pap 30:181–98
    [Google Scholar]
  8. Barrett CB, Reardon T, Webb P. 2001. Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications. Food Policy 26:4315–31
    [Google Scholar]
  9. Becker GS. 1965. A theory of the allocation of time. Econ. J. 75:493–517
    [Google Scholar]
  10. Benjamin D. 1992. Household composition, labor markets, and labor demand: testing for separation in agricultural household models. Econometrica 60:2287–322
    [Google Scholar]
  11. Blundell RW, MaCurdy T. 1999. Labor supply: a review of alternative approaches. Handb. Labor Econ. 3:Part A1559–695
    [Google Scholar]
  12. Blundell RW, MaCurdy T, Meghir C. 2007. Labor supply models: unobserved heterogeneity, nonparticipation and dynamics. Handb. Econom. 6:Part A4667–75
    [Google Scholar]
  13. Bodenstein M, Kamber G, Thoenissen C. 2018. Commodity prices and labour market dynamics in small open economies. J. Int. Econ. 115:170–84
    [Google Scholar]
  14. Boucher S, Smith A, Taylor JE, Yúnez-Naude A. 2007. Impacts of policy reforms on the supply of Mexican labor to U.S. farms: new evidence from Mexico. Rev. Agric. Econ. 29:14–16
    [Google Scholar]
  15. Brady M, Gallardo RK, Badruddozza S, Jiang X. 2016. Regional equilibrium wage rate for hired farm workers in the tree fruit industry. West. Econ. Forum 2016.21–31
    [Google Scholar]
  16. Branco D, Féres J. 2021. Weather shocks and labor allocation: evidence from rural Brazil. Am. J. Agric. Econ 103:135977
    [Google Scholar]
  17. Cassey AJ, Lee K, Sage J, Tozer PR. 2018. Assessing post-harvest labor shortages, wages, and welfare. Agric. Food Econ. 6:17
    [Google Scholar]
  18. Charlton D. 2021. Seasonal farm labor and risk of COVID-19 spread Work. Pap., Dep. Agric. Econ Montana State Univ. Bozeman: https://dicharlton.weebly.com/uploads/5/6/5/0/56504655/covid_labor_draft06.08.2021.pdf
  19. Charlton DE, Taylor JE. 2016. A declining farm workforce: analysis of panel data from rural Mexico. Am. J. Agric. Econ. 98:41158–80
    [Google Scholar]
  20. Charlton DE, Taylor JE, Vougioukas S, Rutledge Z. 2019a. Can wages rise quickly enough to keep workers in the fields?. Choices 34:21–7
    [Google Scholar]
  21. Charlton DE, Taylor JE, Vougioukas S, Rutledge Z. 2019b. Innovations for a shrinking agricultural workforce. Choices 34:21–8
    [Google Scholar]
  22. Chetty R. 2012. Bounds on elasticities with optimization frictions: a synthesis of micro and macro evidence on labor supply. Econometrica 80:3969–1018
    [Google Scholar]
  23. Chetty R, Guren A, Manoli D, Weber A. 2011. Are micro and macro labor supply elasticities consistent? A review of evidence on the intensive and extensive margins. Am. Econ. Rev. 101:3471–75
    [Google Scholar]
  24. Christiaensen L, Martin W. 2018. Agriculture, structural transformation and poverty reduction: eight new insights. World Dev 109:413–16
    [Google Scholar]
  25. Christiaensen L, Rutledge Z, Taylor JE 2021. The future of work in agri-food. Food Policy 99:101963
    [Google Scholar]
  26. Clemens MA, Lewis EG, Postel HM. 2018. Immigration restrictions as active labor market policy: evidence from the Mexican bracero exclusion. Am. Econ. Rev. 108:61468–87
    [Google Scholar]
  27. Cowling K, Metcalf D, Rayner AJ. 1970. Resource Structure of Agriculture: An Economic Analysis Oxford, UK: Pergamon Press
  28. de Janvry A, Fafchamps M, Sadoulet E. 1991. Peasant household behaviour with missing markets: some paradoxes explained. Econ. J. 101:4091400–417
    [Google Scholar]
  29. Dorward A. 2013. Agricultural labour productivity, food prices and sustainable development impacts and indicators. Food Policy 39:40–50
    [Google Scholar]
  30. Duffield JA. 1990. Estimating farm labor elasticities to analyze the effects of immigration reform Staff Rep. 278270, US Dep Agric., Econ. Res. Serv Washington, DC:
  31. Elhorst JP. 1994. Firm-household interrelationships on Dutch dairy farms. Eur. Rev. Agric. Econ. 21:2259–76
    [Google Scholar]
  32. Emerson RD. 1989. Migratory labor and agriculture. Am. J. Agric. Econ. 71:3617–29
    [Google Scholar]
  33. Emerson RD, Roka F 2002. Income distribution and farm labour markets. The Dynamics of Hired Farm Labour: Constraints and Community Responses JL Findeis, AM Vandeman, JM Larson, JL Runyan 15–24 New York: CABI
    [Google Scholar]
  34. Fan M, Gabbard S, Pena AA, Perloff JM. 2015. Why do fewer agricultural workers migrate now?. Am. J. Agric. Econ. 97:3665–79
    [Google Scholar]
  35. Fan M, Pena AA. 2019. Do minimum wage laws affect those who are not covered? Evidence from agricultural and non-agricultural workers. PLOS ONE 14:10e0221935
    [Google Scholar]
  36. Fan M, Pena AA, Perloff JM. 2016. Effects of the great recession on the US agricultural labor market. Am. J. Agric. Econ. 98:41146–57
    [Google Scholar]
  37. Graff Zivin J, Neidell M. 2014. Temperature and the allocation of time: implications for climate change. J. Labor Econ. 32:1126
    [Google Scholar]
  38. Gunter L, Jarrett J, Duffield J 1992. Effect of U.S. immigration reform on labor intensive agricultural commodities. Am. J. Agric. Econ. 74:4897–906
    [Google Scholar]
  39. Haley MR. 2003. The response of worker effort to piece rates: evidence from the Midwest logging industry. J. Hum. Resour. 38:4881–90
    [Google Scholar]
  40. Hernandez T, Gabbard S. 2018. Findings from the National Agricultural Workers Survey (NAWS) 2015–2016: a demographic and employment profile of United States farmworkers Res. Rep. 13, JBS Int. San Mateo, CA: https://www.dol.gov/sites/dolgov/files/ETA/naws/pdfs/NAWS_Research_Report_13.pdf
  41. Hertel TW, Uris Lantz C, Baldos ULC, van der Mensbrugghe D 2016. Predicting long term food demand, cropland use, and prices. Annu. Rev. Resour. Econ. 8:417–41
    [Google Scholar]
  42. Hertz T. 2019. Comparing NAWS to other sources of farm labor data Presented at the NAWS at 30 Conference March 19 Davis, Calif.:
  43. Hill AE 2020a. The labor supply of U.S. agricultural workers Work. Pap., Dep. Agric Resour. Econ., Univ. Calif., Davis https://arefiles.ucdavis.edu/uploads/filer_public/ac/59/ac592f0a-39c4-44b2-ac13-c3cc11ad28eb/hillfarmworkersfinal.pdf
  44. Hill AE 2020b. The minimum wage and productivity: a case study of California strawberry pickers Work. Pap., Dep. Agric Resour. Econ., Univ. Calif., Davis https://arefiles.ucdavis.edu/uploads/filer_public/a8/81/a881c6e7-7140-4129-9068-16f69d80a844/hill_jmp.pdf
  45. Hirsch BT, Husain MM, Winters JV. 2017. The puzzling pattern of multiple job holding across U.S. labor markets. South. Econ. J. 84:126–51
    [Google Scholar]
  46. Huffman WE. 1980. Farm and off-farm work decisions: the role of human capital. Rev. Econ. Stat. 62:114–23
    [Google Scholar]
  47. Ito T, Kurosaki T. 2009. Weather risk, wages in kind, and the off-farm labor supply of agricultural households in a developing country. Am. J. Agric. Econ. 91:3697–710
    [Google Scholar]
  48. Jacoby H. 1993. Shadow wages and peasant family labour supply: an econometric application to the Peruvian Sierra. Rev. Econ. Stud. 60:4903–21
    [Google Scholar]
  49. Jessoe K, Manning DT, Taylor JE. 2018. Climate change and labour allocation in rural Mexico: evidence from annual fluctuations in weather. Econ. J. 128:608230–61
    [Google Scholar]
  50. Johnson SS, Heady EO. 1962. Demand for labor in agriculture CARD Rep. 8, Cent. Agric. Econ Adjust., Iowa State Univ., Ames https://lib.dr.iastate.edu/card_reports/8/
  51. Kandilov AMG, Kandilov IT. 2020. The minimum wage and seasonal employment: evidence from the US agricultural sector. J. Reg. Sci. 60:4612–27
    [Google Scholar]
  52. Kitroeff N. 2017. How this garlic farm went from a labor shortage to over 150 people on its applicant waitlist. Los Angeles Times Feb. 9. https://www.latimes.com/business/la-fi-garlic-labor-shortage-20170207-story.html
    [Google Scholar]
  53. Kjeldahl R. 1995. Direct income payments to farmers: uses, implication and an empirical investigation of labour supply response in a sample of Danish farm households Rep. 85, Landbrugsog Fisk Statens Jordbrugsog Fisk. Inst Copenhagen: https://agris.fao.org/agris-search/search.do?recordID=DK9620112
  54. Kjeldahl R. 1996. Offre de travail des ménages agricoles et revenu découpleé: une enquête au Danemark. Econ. Rurale 233:35–40
    [Google Scholar]
  55. Kuroda Y, Yotopoulos P. 1978. A microeconomic analysis of production behavior of the farm household in Japan: a profit function approach. Econ. Rev. 29:116–29
    [Google Scholar]
  56. Kuroda Y, Yotopoulos P. 1980. A study of consumption behavior of the farm household in Japan: an application of the linear logarithmic expenditure system. Econ. Rev. 31:1–15
    [Google Scholar]
  57. Lass DA, Findeis JL, Hallberg MC 1991. Factors affecting the supply of off-farm labor: a review of empirical evidence. Multiple Job-holding among Farm Families MC Hallberg, JL Findeis, DA Lass 239–62 Ames: Iowa State Univ. Press
    [Google Scholar]
  58. Lau LJ, Lin W-L, Yotopoulos PA. 1978. The linear logarithmic expenditure system: an application to consumption-leisure choice. Econometrica 46:4843–68
    [Google Scholar]
  59. Le KT. 2010. Separation hypothesis tests in the agricultural household model. Am. J. Agric. Econ. 92:51420–31
    [Google Scholar]
  60. Lewis WA. 1954. Economic development with unlimited supplies of labour. Manch. Sch. 22:2139–91
    [Google Scholar]
  61. Li A, Reimer JJ. 2021. The US market for agricultural labor: evidence from the National Agricultural Workers Survey. Appl. Econ. Perspect. Policy 43:112539
    [Google Scholar]
  62. Lopez RE. 1984. Estimating labor supply and production decisions of self-employed farm producers. Eur. Econ. Rev. 24:161–82
    [Google Scholar]
  63. Lopez RE. 1986. The use of composite price expectations in supply response models. Can. J. Agric. Econ. 34:3455–74
    [Google Scholar]
  64. MaCurdy TE. 1981. An empirical model of labor supply in a life-cycle setting. J. Political Econ. 89:61059–85
    [Google Scholar]
  65. Martin PL. 2017. Immigration and farm labor: challenges and opportunities Rep., Giannini Found Agric. Econ., Univ. Calif Berkeley: https://s.giannini.ucop.edu/uploads/giannini_public/dd/d9/ddd90bf0-2bf0-41ea-bc29-28c5e4e9b049/immigration_and_farm_labor_-_philip_martin.pdf
  66. McClelland R, Mok S. 2012. A review of recent research on labor supply elasticities Work. Pap. 2012-12, Congr. Budg. Off Washington, DC: https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/10-25-2012-recentresearchonlaborsupplyelasticities.pdf
  67. McCullough EB. 2017. Labor productivity and employment gaps in Sub-Saharan Africa. Food Policy 67:133–52
    [Google Scholar]
  68. Moretti E, Perloff JM. 2002. Efficiency wages, deferred payments, and direct incentives in agriculture. Am. J. Agric. Econ. 84:41144–55
    [Google Scholar]
  69. Muth RF. 1964. The derived demand curve for a productive factor and the industry supply curve. Oxf. Econ. Pap. 16:221–34
    [Google Scholar]
  70. Newman C, Jarvis L 2000. Worker and firm determinants of piece rate variation in an agricultural labor market. Econ. Dev. Cult. Change 49:1137–69
    [Google Scholar]
  71. Nolte K, Ostermeier M. 2017. Labour market effects of large-scale agricultural investment: Conceptual considerations and estimated employment effect. World Dev 98:430–46
    [Google Scholar]
  72. OECD (Organ. Econ. Co-op. Dev.) 2011. Long term trends in policy performance. Rep. TAD/CA/APM/WP201019/FINAL, Trade Agric. Dir. Comm. Agric. Organ. Econ. Coop. Dev. Paris: https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=TAD/CA/APM/WP(2010)19/FINAL&docLanguage=En
    [Google Scholar]
  73. Paarsch HJ, Shearer BS. 1999. The response of worker effort to piece rates: evidence from the British Columbia tree-planting industry. J. Hum. Resour. 34:4643–67
    [Google Scholar]
  74. Pena AA. 2010. Legalization and immigrants in U.S. agriculture. B.E. J. Econ. Anal. Policy 10:17
    [Google Scholar]
  75. Perloff JM, Lynch L, Gabbard SM. 1998. Migration of seasonal agricultural workers. Am. J. Agric. Econ. 80:1154–64
    [Google Scholar]
  76. Peterman WB. 2015. Reconciling micro and macro estimates of the Frisch labor supply elasticity. Econ. Inq. 54:1100–20
    [Google Scholar]
  77. Reardon T. 1998. Rural non-farm income in developing countries. Work. Pap., Food Agric. Organ., Rome. https://web.worldbank.org/archive/website01066/WEB/IMAGES/RURALNON.PDF
    [Google Scholar]
  78. Richards TJ. 2020. Income targeting and farm labor supply. Am. J. Agric. Econ. 102:2419–38
    [Google Scholar]
  79. Rozelle S, Taylor JE, deBrauw A. 1999. Migration, remittances, and agricultural productivity in China. Am. Econ. Rev. 89:2287–91
    [Google Scholar]
  80. Salhofer K. 2000. Elasticities of substitution and factor supply elasticities in European agriculture: a review of past studies Diskuss. Pap. 83-W-2000, Inst Wirtsch. Politik Recht, Univ. Bodenkult. Wien Austria: https://wpr.boku.ac.at/wpr_dp/dp-83.pdf
  81. Schmitz A, Seckler D. 1970. Mechanized agriculture and social welfare: the case of the tomato harvester. Am. J. Agric. Econ. 52:4569–77
    [Google Scholar]
  82. Schuh GE. 1962. An econometric investigation of the market for hired labor in agriculture. Am. J. Agric. Econ. 44:2307–21
    [Google Scholar]
  83. Schulz-Greve W. 1994. Anpassungspotentiale im institutionellen Kontext des landwirtschaftlichen Haushaltes—eine mikroökonomische Analyse von Zeitallokationsstrukturen. Gesellschaftliche Forderungen an die Landwirtschaft399–410 Münster-Hiltrup, Ger: Landwirtschaftverlag
    [Google Scholar]
  84. Singh I, Squire L, Strauss J. 1986. Agricultural Household Models: Extensions, Applications, and Policy Baltimore, MD: Johns Hopkins Univ. Press
  85. Singh I, Subramanian J 1986. Agricultural household modeling in a multicrop environment: case studies in Korea and Nigeria. Agricultural Household Models: Extensions, Applications, and Policy I Singh, L Squire, J Strauss 95–115 Baltimore, MD: Johns Hopkins Univ. Press
    [Google Scholar]
  86. Skoufias E. 1994. Using shadow wages to estimate labor supply of agricultural households. Am. J. Agric. Econ. 76:2215–27
    [Google Scholar]
  87. Stevens A. 2017. Temperature, wages, and agricultural labor productivity. Work. Pap., Dep. Agric. Resour. Econ., Univ. Calif Berkeley:
    [Google Scholar]
  88. Strauss J. 1986. Does better nutrition raise farm productivity?. J. Political Econ. 94:2291–320
    [Google Scholar]
  89. Taylor JE. 1987. Undocumented Mexico-U.S. migration and the returns to households in rural Mexico. Am. J. Agric. Econ. 69:3626–38
    [Google Scholar]
  90. Taylor JE, Adelman I. 2003. Agricultural household models: genesis, evolution, and extensions. Rev. Econ. Househ. 1:1–233–58
    [Google Scholar]
  91. Taylor JE, Charlton D 2018. The Farm Labor Problem: A Global Perspective Amsterdam: Elsevier
  92. Thijssen G. 1988. Estimating a labour supply function of farm households. Eur. Rev. Agric. Econ. 15:167–78
    [Google Scholar]
  93. Torok SJ, Huffman WE. 1986. U.S.-Mexican trade in winter vegetables and illegal immigration. Am. J. Agric. Econ. 68:2246–60
    [Google Scholar]
  94. Traill B. 1982. The effect of price support policies on agricultural investment, employment, farm incomes, and land values in the U.K. J. Agric. Econ. 33:369–85
    [Google Scholar]
  95. Tyrchniewicz EW, Schuh GE. 1969. Econometric analysis of the agricultural labor market. Am. J. Agric. Econ. 51:4770–87
    [Google Scholar]
  96. Wang GHK, Heady EO. 1980. Econometric analysis of U.S. farm labor markets CARD Rep. 91, Cent. Agric. Econ. Adjust., Iowa State Univ., Ames https://core.ac.uk/download/pdf/38890654.pdf
  97. Weatherford WD. 1957. Geographic Differentials of Agricultural Wages in the United States Cambridge, MA: Harvard Univ. Press
  98. Wolfson RJ. 1958. An econometric investigation of regional differentials in american agricultural wages. Econometrica 26:2225–57
    [Google Scholar]
/content/journals/10.1146/annurev-resource-101620-080426
Loading
/content/journals/10.1146/annurev-resource-101620-080426
Loading

Data & Media loading...

  • Article Type: Review Article
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error