Farmworker bargaining in US agricultural labor markets

Ujjwol Paudel and Timothy J. Richards

Applied Economic Perspectives and Policy, 2025, vol. 47, issue 4, 1507-1537

Abstract: “Superstar firms” can be large and successful without necessarily exploiting market power over labor markets (Autor et al., Quarterly Journal of Economics 2020; 135(2):645–709). In this paper, we examine this idea in an agricultural labor market setting by studying the empirical relationship between employment surplus, which is essentially the excess of a worker's value of marginal product over their wage, and wages. We use a model of search, match, and bargaining that explains how the surplus from worker's productivity is split between workers and employers. Our estimates show that workers' mean productivity is $8.67 per hour, and they receive 24.2% of employment surplus, but both exhibit substantial heterogeneity over workers. Heterogeneity in productivity and bargaining power suggests that workers who are able to generate “a bigger pie” may also earn a larger share of it. Consistent with this notion, our analysis shows a robust positive elasticity of surplus with observed wages, implying that agricultural firms gain more (surplus) by paying their workers higher wages and not necessarily through exploitation or “winner‐take‐all” strategy.

Date: 2025
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https://doi.org/10.1002/aepp.13526

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Persistent link: https://EconPapers.repec.org/RePEc:wly:apecpp:v:47:y:2025:i:4:p:1507-1537

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