Income Targeting and Farm Labor Supply

Research output: Contribution to journalArticle

Abstract

There is considerable anecdotal evidence that farm workers who are paid by piece rate tend to “income target,” or work only until they achieve a certain amount of daily income, and then stop work. We estimate reduced-form and structural models derived from the reference-dependent preference model of Koszegi and Rabin (2006) to test the income-targeting hypothesis using data from the National Agricultural Workers Survey (NAWS). We find evidence that supports the income-targeting hypothesis, in both the reduced-form and structural econometric models. Our findings suggest that even higher piece rates may not help the widely reported shortage of agricultural labor on the intensive margin as labor-supply curves can be backward bending.

Original languageEnglish (US)
JournalAmerican Journal of Agricultural Economics
DOIs
StateAccepted/In press - Jan 1 2020

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Keywords

  • Farmworkers
  • income-targeting
  • labor supply
  • minimum-wage policy
  • reference-dependent preferences

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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