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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
Hosted By: Agricultural and Applied Economics Association
  • Chair: James MacDonald, University of Maryland-College Park

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.

Effects of NAFTA on Rural U.S. Employment and Wages

Diane Charlton
,
Montana State University

Abstract

Globally, barriers to trade have increased in recent years (Constantinescu et al. 2018). These barriers include increased tariffs from recent trade wars and restrictions on the movement of people and goods implemented in response to Covid-19 (Beckman and Countryman 2021; Beckman et al. 2021; WTO 2020). Therefore, there is a renewed demand for economists to examine the efficiency and distributional implications of existing and proposed trade policies. In this paper, we measure the employment and wage effects within U.S. counties of annual crop, livestock, the effects of nonfarm tariffs and non-tariff measures (NTMs) on U.S. imports of Mexican goods, and the effects of Mexican tariffs and NTMs on U.S. goods from 1993-2010. These years span the roll-out of trade liberalization that occurred through the North American Free Trade Agreement (NAFTA). This is the first paper to our knowledge that rigorously examines the effects of agricultural and non-agricultural trade policies on wages and employment in rural communities of the United States. We create a unique dataset that combines trade data detailed to the 6-digit Harmonized System (HS) product code with county-level acreage and production data for specific crops and livestock in the U.S. Agricultural Census, crop production Cost & Returns reports, and wage and employment data from the Quarterly Census of Employment and Wages. Our methods are similar to those of Hakobyan and McLaren (2016) but differ importantly in that we rigorously examine the effects of agricultural tariffs as well as non-agricultural tariffs.
JEL Classifications
  • A1 - General Economics