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Estimating Farm Labor Elasticities To Analyze The Effects Of Immigration Reform

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  • Duffield, James A.

Abstract

A simultaneous equation model was utilized to help measure the impact of the Immigration Reform and Control Act (IRCA) of 1986 on the U.S. farm labor market. Data from 1948 to 1988 were used in fitting the model to estimate the responsiveness of the farm labor market to changes in economic factors such as farm prices, wages, income, and farm size. Farm labor supply and demand elasticities were derived from two-stage least squares estimates. Results found an elastic (-1.44) relationship between the demand for hired labor and changes in the real wage rate. This means a 10-percent increase in the real wage results in a 14.4-percent decline in the number of hired workers demanded. If the labor supply is restricted by the IRCA, the real wage rate is not expected to rise significantly because farm employers may switch to labor-saving technology or move to less labor-intensive crops to avoid paying higher wages. Furthermore, major labor shortages are not expected in the near future because it will take time for farmworkers, particularly aliens legalized under the program, to leave agriculture to take advantage of opportunities in the nonfarm sector.

Suggested Citation

  • Duffield, James A., 1990. "Estimating Farm Labor Elasticities To Analyze The Effects Of Immigration Reform," Staff Reports 278270, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerssr:278270
    DOI: 10.22004/ag.econ.278270
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    References listed on IDEAS

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    Cited by:

    1. Peter B. Dixon & Maureen T. Rimmer & Bryan W. Roberts, 2014. "Restricting Employment Of Low-Paid Immigrants: A General Equilibrium Assessment Of The Social Welfare Implications For Legal U.S. Wage-Earners," Contemporary Economic Policy, Western Economic Association International, vol. 32(3), pages 639-652, July.
    2. Runyan, Jack L. & Oliveira, Victor J., 1992. "A Geographic Analysis of Seasonal Agricultural Services Farms," Agricultural Information Bulletins 309657, United States Department of Agriculture, Economic Research Service.
    3. Rutledge, Zach, 2020. "No Farm Workers, No Food? Evidence from Specialty Crop Production," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304249, Agricultural and Applied Economics Association.
    4. Roger Claassen & Richard Horan, 2001. "Uniform and Non-Uniform Second-Best Input Taxes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(1), pages 1-22, May.
    5. Goodwin, H. L., 1991. "The U.S.-Mexico Free Trade Agreement: Agricultural Labor Issues," Reports 257951, Texas A&M University, Agribusiness, Food, and Consumer Economics Research Center.
    6. Andrew J. Cassey & Kwanyoung Lee & Jeremy Sage & Peter R. Tozer, 2018. "Assessing post-harvest labor shortages, wages, and welfare," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-24, December.
    7. 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.
    8. Claassen, Roger & Gardner, Bruce L., 1994. "Implications for U.S. Farm Labor and Land Markets of the Free Trade Agreement with Mexico," Working Papers 197798, University of Maryland, Department of Agricultural and Resource Economics.
    9. Goodwin, Harold L., Jr., 1991. "Entrepreneurship, Sanctions, And Labor Contracting: Discussion," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 23(1), pages 1-6, July.
    10. Brady, Michael P. & Gallardo, R. Karina & Badruddozza, Syed & Jiang, Xiaojiao, 2016. "Regional Equilibrium Wage Rate for Hired Farm Workers in the Tree Fruit Industry," Western Economics Forum, Western Agricultural Economics Association, vol. 15(1), pages 1-12.
    11. Findeis, Jill L. & Chitose, Yoshimi, 1994. "Hired Farm Labor: U.S. Trends and Survey Results for Pennsylvania," AE & RS Research Reports 257732, Pennsylvania State University, Department of Agricultural Economics and Rural Sociology.
    12. Espey, Molly & Thilmany, Dawn D., 2000. "Farm Labor Demand: A Meta-Regression Analysis Of Wage Elasticities," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(1), pages 1-15, July.

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