Health Coverage and Farmworker Productivity
AAEA members publish new research in AJAE
New immigration policy set by the Trump administration could result in dramatic changes in agricultural labor markets, such as a reduction in undocumented labor, which makes up roughly half of the farm workforce. Labor is one of the greatest input costs for agricultural production, meaning that changes in the composition of labor can affect crop output. Farmers might consider expanding their non-pay employment benefits and offer health insurance coverage to attract and retain US farm workers.
According to new research on the effects of employer-provided coverage, if rates of coverage increased by 20%, then farmworkers would earn $23,063/year in real income (vs. $22, 482 in the base scenario) and farmers would earn $7,303 in net profit per worker per year (vs. $6, 598 in the base scenario).
In their recent article, “Health Coverage and Farmworker Productivity”, published in the American Journal of Agricultural Economics, Zachariah Rutledge from Michigan State University, Timothy Richards from Arizona State University and John Lowrey from Northeastern University characterize the effect of employer-provided healthcare coverage on farmworker productivity.
The authors find that, “Worker health functions as a private good, meaning that firms capture the economic value of their investment in worker health through increased work capacity and higher employment surplus. These findings are crucial because they suggest that farmers who offer healthcare benefits to their workers are better off than those who do not, as they tend to earn more surplus per hour of work performed on average. From an employee perspective, workers are better off as healthcare coverage causes them to stay with the same employer longer, enjoy better health, and earn more for every hour they work. “
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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. The AAEA publishes three journals, the Journal of the Agricultural and Applied Economics Association (an open access journal), 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 Ware
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Email: aware@aaea.org