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Income Targeting and Farm Labor Supply
Author(s) -
Richards Timothy J.
Publication year - 2020
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1002/ajae.12032
Subject(s) - economics , economic shortage , work (physics) , labour economics , margin (machine learning) , agriculture , demographic economics , mechanical engineering , ecology , linguistics , philosophy , machine learning , government (linguistics) , computer science , engineering , biology
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.