Farm labor supply and fruit and vegetable production

Abstract

This study provides econometric estimates of the effects of reductions in farm labor supply on the production of hand‐harvested fruits and vegetables. Using crop production and employment data from California counties, we estimate panel regressions linking farm employment to crop production outcomes. Because we exploit variation in equilibrium employment, as opposed to exogenous variation in the labor supply curve, we use an equilibrium displacement model to identify the most likely sources of estimation bias and conclude that our regression estimates should be interpreted as upper bounds for the effect of interest. Our results indicate that a 10% decrease in the farm labor supply (in terms of the number of workers) causes at most a 4.2% reduction in production in the top 10 fruit and vegetable producing counties. Production effects are channeled primarily through a reduction in harvested acreage, although we also uncover some effects on yield.