Journal
AMERICAN JOURNAL OF AGRICULTURAL ECONOMICS
Volume 102, Issue 2, Pages 419-438Publisher
WILEY
DOI: 10.1002/ajae.12032
Keywords
Farmworkers; income-targeting; labor supply; minimum-wage policy; reference-dependent preferences
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Funding
- AFRI-USDA [201967023-29415]
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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.
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