A neoclassical measure of labor exploitation in American agriculture

Quirino Paris and Theodore Lianos

European Review of Agricultural Economics, 1974, vol. 2, issue 2, 235-254

Abstract: Summary The paper deals with the problem of labor remuneration in American agriculture over a twenty-four year period. The analysis is carried out within a neoclassical framework. Thus, it explicitly addresses the question of whether agricultural workers have been paid according to the value of their marginal productivity. To this end, a model of factor augmenting technical progress is adopted. With the further assumptions that the rate of change of labor efficiency is non-negative, and that the elasticity of substitution between capital and labor is greater than one, it is shown that American agricultural workers have been paid wages consistently lower than the value of their marginal productivity. The problem of aggregating all the labor force into a single category is discussed at some length. It is also argued that the productive structure of the sector creates the conditions for the ‘self exploitation’ of family labor. The limitation of the analysis lies in the assumption of a linear homogeneous production function. The same assumption, however, constitutes also its great advantage in that it does not require data on capital investment and the rate of profit. Such data are difficult to collect and are often controversial.

Date: 1974
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