Hysteresis and the Shortage of Agricultural Labor

Abstract

Fruit and vegetable growers often allege a shortage of agricultural workers, but in a review of the H2A nonimmigrant guestworker program the General Accounting Office claims that no such shortage exists. The apparent shortage may be due to workers that are in the labor force but do not choose to take agricultural jobs. According to real options theory, when nonagricultural jobs are uncertain, workers require added incentive to invest in sectoral migration. Estimates of an arbitrage model in monthly Washington state wage data show the labor-shortage probability to be far greater than the probability of a surplus. Copyright 1998, Oxford University Press.

The Maximum Incremental Social Tolerable Irreversible Costs (MISTICs) and other benefits and costs of introducing transgenic maize in the EU-15

“…McDonald and Siegel, 1986;Dixit and Pindyck, 1994;Trigeorgis, 1996). Recently, the approach has been applied, among other things, to the adoption of soil conservation measures (Winter-Nelson and Amegbetto, 1998), marketing (Richards and Green, 2003), wilderness preservation (Conrad, 2000), agricultural labour migration (Richards and Patterson, 1998), the introduction of herbicide-tolerant sugar beets in the EU ) and the analysis of government reforms (Leitzel and Weisman, 1999). In the case of transgenic crops there are the additional irreversible government policy costs of the implementation of biosafety regulations and changes in patent laws.…”

Irreversible costs and benefits of transgenic crops: what are they?

“…Dixit and Pindyck (1994) suggest an application of the real-option approach not only to investment problems but to all kinds of decision-making under temporal uncertainty and irreversibility 1 . Recently, the approach has been applied in agriculture to, among others, the adoption of soil-conservation measures (Winter-Nelson and Amegbeto 1998;Shively 2000), marketing (Richards and Green 2000), wilderness preservation (Conrad 2000), agricultural labour migration (Richards and Patterson 1998) and investment in irrigation technology (Carey and Zilberman 2002). Applications related to agricultural biotechnology include studies by Demont, Wesseler and Tollens (2004), Knudsen and Scandizzo (2003), Morel et al (2003) and Wesseler (2003).…”

Changes in Labour Market and Domestic Agriculture

“…Histeresis refers to the failure of a phenomenon to reverse itself once its initial cause is removed (Dixit, 1989). Richards and Patterson (1998) used this argument to explain labour market disequilibrium that agricultural workers, once induced to move out of the non-agricultural sector, are hesitant to return even though the relative returns to doing so may make such a move rational. The reason for this reluctance is that workers make an irreversible investment in human capital specific to non-agricultural sector.…”