Taxi Drivers vs Farm Workers: What are the Differences?

AAEA member research released in AJAE

Some argue that farmers can address the shortage of agricultural labor simply by paying higher wages.  However, research using taxi drivers (and in other settings) show that workers who are paid on piece-rates (by the ride, or by the box) can have “backward bending supply curves,” or work less when their wages rise beyond a certain amount of income per day. We test this hypothesis using data from farm workers in California.

In a new article released in the American Journal of Agricultural Economics (AJAE), Timothy Richards from Arizona State University, entitled “Income Targeting and Farm Labor Supply” discusses the labor shortage issue.

Richards says, “We find that labor-supply curves can indeed bend backward. For a worker who is both above how much he or she wanted to make that day, and has worked a full 8 hour day, a wage that is 25% higher will lead to 6% less work. So, higher wages will not necessarily help people who are already working address the labor-shortage problem.”

If you are interested in setting up an interview with Richards, please contact Allison Scheetz in the AAEA Business Office.

ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. AAEA publishes two journals, the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org.

Contact: Allison Scheetz
Senior Communications Manager
(414) 918-3190
Email: ascheetz@aaea.org