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Labor Contracting and a Theory of Contract Choice in California Agriculture

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  • Ann Vandeman
  • Elisabeth Sadoulet
  • Alain de Janvry

Abstract

We present a model of labor contracts, where seasonality, the sensitivity of output to labor quality and work intensity, and the relative advantages of labor contractors in recruitment and growers in supervision of seasonal farm workers determine the choice of employment contract. Differences in the optimal means of extracting work result in lower wages paid under labor contracting than direct hiring. We derive and estimate the probability of labor contracting and wages as functions of worker and job characteristics using data on California farm workers and employers. From estimated expected wages, our results indicate that successful unionization or reducing the flow of undocumented workers into California agriculture both would reduce contracting and increase wages.

Suggested Citation

  • Ann Vandeman & Elisabeth Sadoulet & Alain de Janvry, 1991. "Labor Contracting and a Theory of Contract Choice in California Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 681-692.
    • Handle: RePEc:oup:ajagec:v:73:y:1991:i:3:p:681-692.
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    Cited by:

    1. Key, Nigel & Runsten, David, 1999. "Contract Farming, Smallholders, and Rural Development in Latin America: The Organization of Agroprocessing Firms and the Scale of Outgrower Production," World Development, Elsevier, vol. 27(2), pages 381-401, February.
    2. Dawn Thilmany & Steven C. Blank, 1996. "FLCs: An analysis of labor management transfers among California agricultural producers," Agribusiness, John Wiley & Sons, Ltd., vol. 12(1), pages 37-49.
    3. Lopamudra Banerjee, 2021. "Natural hazard, employment uncertainty, and the choice of labor contracts," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 47(2), pages 227-252, April.
    4. Guan, Zhengfei & Wu, Feng, 2018. "Regulation and Farm Labor Market Structure," 2018 Annual Meeting, August 5-7, Washington, D.C. 274168, Agricultural and Applied Economics Association.
    5. Jeffrey Alwang & Judith I. Stallmann, 1994. "The interactions between health benefits and farm wages in Virginia," Agribusiness, John Wiley & Sons, Ltd., vol. 10(3), pages 229-240.
    6. Sutti Ortiz, 2012. "Decisions and Choices: The Rationality of Economic Actors," Chapters, in: James G. Carrier (ed.), A Handbook of Economic Anthropology, Second Edition, chapter 4, Edward Elgar Publishing.

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