Regional Supply of Hired Labor to Agriculture

The existence of a wide disparity in labor returns between the farm and nonfarm sectors and considerable variations in agricultural wage rates among regions suggest that there may be real differences in factors affecting the supply of and demand for labor among sectors and regions. A knowledge of these supply and demand structural relationships could be of use to policy makers in developing measures that will help to minimize some of these income and wage discrepancies. In this study, regional supply relations for hired agricultural labor are developed and estimated. Two hypotheses are tested: (a) that members of the hired farm labor force respond to economic stimuli with a distributed lag, and (b) that they participate in a national rather than a regional labor market. The results support both hypotheses. One of the policy implications is that programs which increase nonfarm wages are more effective in the long run in raising farm labor income than programs which raise prices of farm products.