No abstract

There is a chronic shortage of agricultural labor in the US. Although growers increasingly turn to guest‐worker programs to meet their labor needs, few regard immigrant workers as a viable long‐term solution. Many producers of labor‐intensive agricultural commodities regard mechanization as a clear long‐term solution, making the slow rate of adoption of mechanized harvesting equipment in the US an empirical puzzle. In this article, we demonstrate that wage‐setting farmers have an incentive to “overmechanize,” or employ more than the cost‐minimizing level of capital when capital and labor are substitutes, but “undermechanize” when labor and capital are technical complements. This outcome can cause agricultural labor problems to persist under complementarity. To assess the potential role of farm under investment in labor augmenting capital equipment, we examine labor market outcomes following the adoption of non‐autonomous harvesting aids on a large strawberry farm in Central California. We develop an econometric model of peer‐affected productivity that controls for the group performance of farm workers operating in crews and find that mechanical aids complement labor in strawberry production, a finding that helps explain not only the relative lack of mechanized harvesting in strawberry production but, more generally, the persistent productivity gap in agricultural industries. We examine the broader implications of our theory for the slow rate of adoption of mechanical harvesting technologies in US agriculture by comparing general wage trends across several labor‐intensive and non‐labor‐intensive industries in California.

No abstract

This paper reports the results of experiments designed to test the effect of experience on preferences for self-protection against low and high probability losses. Subjects gained experience by repeatedly making choices about whether or not to invest in a protective activity and then observing the result of their choice. Half of the subjects faced a low probability risk while the other half faced a higher probability risk with the severity of loss scaled down to hold expected value constant. Protection was more common against the high probability risk. Despite receiving full information about the risks in advance, most subjects made choices in response to prior outcomes. This led to a great deal of experimentation when losses were common (the high probability risk) but very little experimentation when losses were infrequent (the low probability risk).

No abstract