Can Technology Compensate for a Labor Shortage? Effects of 287(g) Immigration Policies on the U.S. Dairy Industry

Abstract

We leverage spatial and temporal variation in the implementation of county-level 287(g) immigration enforcement policies as a quasi-experiment to measure the effects of an inward shift in the local immigrant labor supply on U.S. dairy operations. Our findings show that 287(g) policies cause production and labor expenditures per farm to decrease and labor efficiency to increase. The primary dairy operator is more likely to have off-farm income, and dairies are more likely to use select labor-saving technologies after 287(g) is implemented. Nevertheless, the number of dairies in operation, total milk production, and average dairy size in the county decline. Our findings indicate that the dairy industry became more labor efficient and technologically advanced as a result of the 287(g) program. However, total production declined. We conclude that technological gains in the dairy industry were insufficient to entirely offset the negative shock to production resulting from an inward shift in labor supply, at least in the short run. These findings are of importance for labor-intensive industries that could potentially experience an adverse labor supply shock.

Seasonal farm labor and COVID‐19 spread

“…Richards (2018) shows evidence of persistent farm labor shortages in sub‐sectors of the California farm labor market. Inward farm labor supply shocks due to changes in immigration enforcement policies have led to increased farm wages and reduced agricultural producer profitability (Ifft & Jodlowski, 2016; Kostandini et al, 2014), substitution of capital for labor (Charlton & Kostandini, 2020; Clemens et al, 2018), and increased supply of family farm labor (Luo et al, 2018). The coronavirus pandemic in 2020 differs from previous shocks to labor supply in that the pandemic is likely temporary and the pandemic shocked multiple labor sectors throughout the global economy at once.…”

The effects of E‐Verify on the share of labor‐Intensive and capital‐Intensive crops: Evidence from farm‐level data

“…There may be endogeneity concerns related to the model as the timing and location of the 287(g) agreements may not be exogenous but the factors that affect a county's decisions to implement a 287(g) agreement are not expected to be correlated to changes in the production of labor‐ and capital‐intensive crops at the farm level. As Charlton and Kostandini (2020) indicate, the timing of a 287(g) agreement cannot be predicted as counties that applied for 287(g) agreements typically spent 1−3 years in a waitlist and approval depended on the ability of the Immigration and Customs Enforcements (ICE) to provide funding.…”

“…The dependence of agriculture on immigrant labor has risen to a topic of debate when discussing immigration reform laws, promoting more research on the effects of immigration laws. Previous research indicates that local immigration enforcement laws have a negative impact on immigrant populations within the region of enforcement (Bohn et al., 2014; Kostandini et al, 2014; Orrenius & Zavodny, 2016) and the decline in the immigrant population from immigration enforcement laws has resulted in a decline of total farm workers and decreased agricultural productivity (Charlton & Kostandini, 2020; Ifft & Jodlowski, 2016; Kostandini et al, 2014; Luo et al, 2018). In addition, stricter border and domestic controls during the last decade have contributed to the labor‐shortage problems and decreased US agricultural production (Devadoss & Luckstead, 2018).…”

The Importance of Agriculture in the Economy: Impacts from COVID‐19

“…Finally, the last piece to mention with regard to current and future changes that could impact the agricultural sector is the labor situation. As pointed out in Charlton and Kostandini (2020), more than half of the employees in dairy production are immigrants, and seasonal immigrant labor is essential for agricultural production across commodities. COVID‐19 has led to many regions closing their borders, which could lead to labor shortages across both agricultural and nonagricultural sectors.…”