Farm labor productivity and the impact of mechanization

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.

Farm labor supply and fruit and vegetable production

“…Inference based on clustered standard errors is also not valid in our setting because the number of clusters should be large for the standard error estimates to be consistent, yet we consider 10 counties at most. Instead, we use Driscoll‐Kraay standard errors (Driscoll & Kraay, 1998; Hoechle, 2007), which are robust to general forms of cross‐sectional dependence, heteroskedasticity, and serial correlation up to a specified number of lags. We determine the number of lags by using the heteroskedastic‐robust Cumby‐Huizinga general test for serial correlation (Cumby & Huizinga, 1990).…”

“…American farmers have reported recurrent farm labor shortages and lamented their effects for more than a decade (CFBF & UC Davis, 2019;della Cava & Lopez, 2019;Estrabrook, 2021;Glaister, 2006;Plummer, 2013). In the meantime, a rich economic literature has assessed their empirical prevalence (Hertz & Zahniser, 2012;Martin, 2007;Richards, 2018), identified some of their causes (Boucher et al, 2007;Charlton & Taylor, 2016;Fan et al, 2015;Kostandini et al, 2013;Richards & Patterson, 1998;Taylor et al, 2012), and discussed mitigating strategies (Charlton et al, 2019;Hamilton et al, 2021;Richards, 2018Richards, , 2020Taylor et al, 2012;Zahniser et al, 2018). Although a consensus seems to have emerged that agricultural labor is indeed becoming scarcer (Charlton & Taylor, 2016;Richards, 2018;Taylor et al, 2012), 1 the extent to which labor shortages actually impact the supply of agricultural goods, particularly labor-intensive and perishable crops such as fruits and vegetables (FV), remains unclear.…”

“…Hamilton et al (2021) argue that the adoption of mechanical harvest aids, which serve as technical complements in production, has lagged behind because these technologies increase productivity and push wages up, thus disincentivizing their use.…”

Gender and mechanization: Evidence from Indian agriculture

“…More recently, research on improved seed varieties (Bustos et al, 2016; Emerick et al, 2016), increased fertilizer (Beaman et al, 2013), and irrigation (Asher et al, 2021) finds a positive impact on labor use due to increased productivity. On the other hand, the literature that looks at technological changes brought by agricultural mechanization in power‐intensive operations like tilling and harvesting (other than irrigation) has largely found a reduction or no effect on labor use depending on complementarity between labor and machines (Hamilton et al, 2021). For instance, in a review of 24 studies examining the effect of mechanization in agriculture on labor use, Norman et al (1988) find that all, except two, report lower labor use for farms that used tractors as opposed to draft animals.…”

Capital-Labor Substitution and Economic Efficiency in the Context of Industry 4.0

“…A US agricultural study (Hamilton et al, 2021) points to problems, suggesting that wagesetting farmers have an incentive to "over-mechanize" or employ more than a level of capital that minimizes costs when capital and labor are substitutes but "under-mechanize", when labor and capital are technical additions.…”