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The labor supply response to agricultural wages is critical to the viability of crop production in high-income countries, which hire a largely foreign farm work force, as well as in low-income countries, where domestic workers move off the farm as the agricultural transformation unfolds. Modeling agricultural labor supply is more challenging than modeling the supply of other agricultural inputs or of labor to other sectors of the economy owing to unique features of agricultural production and farm labor markets. Data and econometric challenges abound, and estimates of agricultural labor supply elasticities are sparse. This review explains the importance and challenges of modeling farm labor supply and describes researchers’ efforts to address these challenges. It summarizes estimates of agricultural labor supply elasticities over the last 80 years, provides insights into variation in these estimates, identifies priority areas for future research, and reviews the most influential empirical work related to this important topic.

Improving children's access to primary and secondary education is a strategic goal for many global development agencies and government policymakers. Nevertheless, there is relatively little research examining how changes in rural school supply affect future labor markets. We leverage variation in the timing and location of secondary school construction in Southern Mexico to identify the effects of school supply on labor outcomes. We find that school construction increases expected education for school‐aged children by about 4 years and raises the share of years working in the nonagricultural sector between the ages of 18–22 by 29.8 percentage points. The magnitude of the effects on share of years doing nonagricultural work is smaller for individuals from homes where an indigenous language is spoken. Our findings indicate that rural school construction in less‐developed countries can accelerate the transformation from agricultural to nonagricultural economies, but there may be heterogeneous effects across socioeconomic groups and ethnicities.

Labor markets can shape the impacts of global market developments and local sustainability policies on agricultural outcomes, including changes in production and land use. Yet local labor market outcomes, including agricultural employment, migration and wages, are often overlooked in integrated assessment models (IAMs). The relevance of labor markets has become more important in recent decades, with evidence of diminished labor mobility in the United States (US) and other developed countries. We use the SIMPLE-G (Simplified International Model of agricultural Prices, Land use, and the Environment) modeling framework to investigate the impacts of a global commodity price shock and a local sustainable groundwater use policy in the US. SIMPLE-G is a multi-scale framework designed to allow for integration of economic and biophysical determinants of sustainability, using fine-scale geospatial data and parameters. We use this framework to compare the impacts of the two sets of shocks under two contrasting assumptions: perfect mobility of agricultural labor, as generally implicit in global IAMs, and relatively inelastic labor mobility (‘sticky’ agricultural labor supply response). We supplement the numerical simulations with analytical results from a stylized two-input model to provide further insights into the impacts of local and global shocks on agricultural labor, crop production and resource use. Findings illustrate the key role that labor mobility plays in shaping both local and global agricultural and environmental outcomes. In the perfect labor mobility scenario, the impact of a commodity price boom on crop production, employment and land-use is overestimated compared with the restricted labor mobility case. In the case of the groundwater sustainability policy, the perfect labor mobility scenario overestimates the reduction in crop production and employment in directly targeted grids as well as spillover effects that increase employment in other grids. For both shocks, impacts on agricultural wages are completely overlooked if we ignore rigidities in agricultural labor markets.

Agricultural employment is critical to the lives of hundreds of millions of men and women across the globe as well as to the farms that employ them and the communities in which they live. However, as the agricultural transformation unfolds, workers move off the farm to jobs in an expanding food services sector, in urban areas, and abroad, with far-reaching ramifications for agricultural producers and labor markets. This chapter examines the changing role of agricultural employment in developing and developed economies. It draws from two decades of research using a wide diversity of analytical approaches to document how agricultural labor markets evolve and the impact this evolution has on workers, farmers, and rural economies. We highlight new empirical findings, emerging themes, and policy implications, including the growing concentration of off-farm agri-food employment, migration, changing gender roles, climate change and the legacy of the COVID-19 pandemic.

Sustainable development (SD) policies targeting marine economic sectors, designed to alleviate poverty and conserve marine ecosystems, have proliferated in recent years. Many developing countries are providing poor fishing households with new fishing boats (fishing capital) that can be used further offshore as a means to improve incomes and relieve fishing pressure on nearshore fish stocks. These kinds of policies are a marine variant of traditional SD policies focused on agriculture. Here, we evaluate ex ante economic and environmental impacts of provisions of fishing and agricultural capital, with and without enforcement of fishing regulations that prohibit the use of larger vessels in nearshore habitats. Combining methods from development economics, natural resource economics, and marine ecology, we use a unique dataset and modeling framework to account for linkages between households, business sectors, markets, and local fish stocks. We show that the policies investing capital in local marine fisheries or agricultural sectors achieve income gains for targeted households, but knock-on effects lead to increased harvest of nearshore fish, making them unlikely to achieve conservation objectives in rural coastal economies. However, pairing an agriculture stimulus with increasing enforcement of existing fisheries' regulations may lead to a win-win situation. While marine-based policies could be an important tool to achieve two of the United Nations Sustainable Development Goals (alleviate poverty and protect vulnerable marine resources), their success is by no means assured and requires consideration of land and marine socioeconomic linkages inherent in rural economies.

Highlights • As countries develop, job creation in agri-food shifts beyond the farm. • Jobs in the agri-food system, on and off the farm, remain key for youth in Africa. • Agri-food in developed countries relies on migrants. Technology reduces this. • COVID-19 fosters automation and reduces agricultural migration and trade. • Policies must promote inclusive agricultural chains and social insurance., As countries develop, agriculture’s role as domestic employer declines. But the broader agri-food system also expands, and the scope for agriculture-related job creation shifts beyond the farm. Historically, technological revolutions have shaped, and have been shaped by, these dynamics. Today, a digital revolution is taking hold. In this process of structural transformation, societies evolve from having a surplus to a shortage of domestic farm labor, typically met by foreign agricultural wage workers. Yet anti-immigration sentiments are flying high in migrant-destination countries, and agricultural trade may be similarly challenged. Robots in the fields and packing plants offer an alternative to a diminishing labor supply. COVID-19 will reinforce trends of digitization and anti-globalization (including in food trade), while slowing economic growth and structural transformation. In the world’s poorest countries, particularly in Africa, labor productivity in agriculture remains at historically low levels. So, what role can the agri-food system play as a source of employment in the future? This viewpoint elaborates on these trends and reviews several policy options, including inclusive value chain development, better immigration policies, social insurance schemes, and ramp up in agricultural education and extension.

As countries develop (and food saturation takes hold), agriculture's role as domestic employer declines. But the broader agri-food system also expands, and the scope for agriculture-related job creation shifts beyond the farm. Historically, technological revolutions have shaped and been shaped by these dynamics. Today, a digital revolution is taking hold, affecting agricultural labor and skill demands. In this process, societies evolve from having a surplus to a shortage of domestic farm labor, typically met largely by foreign agricultural wage workers. Yet, anti-immigration sentiments are flying high in migrant-destination countries, and robots in the fields and packing plants offer an alternative. Agricultural trade may be similarly challenged. In the world's poorest countries, particularly in Africa, labor productivity in agriculture remains at historically low levels. So, what can the role of agriculture as a source of employment be in the future? This viewpoint elaborates on these trends and reviews several policy options, including inclusive value chain development, better immigration policies, social insurance schemes, and ramp up in agricultural education and extension.

© 2018 The US and Mexico share a common history in many areas, including language and culture. They face ecological changes due to the increased frequency and severity of droughts and rising energy demands; trends that entail economic costs for both nations and major implications for human wellbeing. We describe an ongoing effort by the Environment Working Group (EWG), created by The University of California's UC-Mexico initiative in 2015, to promote binational research, teaching, and outreach collaborations on the implications of climate change for Mexico and California. We synthesize current knowledge about the most pressing issues related to climate change in the US-Mexico border region and provide examples of cross-border discoveries and research initiatives, highlighting the need to move forward in six broad rubrics. This and similar binational cooperation efforts can lead to improved living standards, generate a collaborative mindset among participating universities, and create an international network to address urgent sustainability challenges affecting both countries.

Technological change holds the potential to increase crop output as well as incomes of farmers and the communities in which they live. We carry out a local economy-wide impact evaluation of productivity-enhancing technological change amongst small-scale cotton producers in Tanzania’s Lake Zone. Our analysis reveals that demand constraints shift benefits from farmers to downstream processors, while limiting positive spillovers within local economies. Excess cotton gin capacity does the opposite. Interventions to ensure markets for increased output should complement strategies to raise productivity if a project’s goal is to improve welfare in farm households and the communities in which they live. Published version

Summary We analyze economic life in three Congolese refugee camps in Rwanda and the interactions between refugees and local host-country economies within a 10-km radius around each camp. Refugees in one of the three camps received food aid in kind, while in the other two camps they were given cash via cell phones provided by the UN World Food Programme. We find that refugee economies arise inside each camp, and the structure of these economies reflects the economic context around the camps. Despite undergoing forced migration and often living in destitute conditions, refugees actively interact with host country economies. Interactions with the host country result in a divergence of refugee households’ income from the assistance they receive. A shift from in-kind to cash aid appears to increase refugee welfare while strengthening market linkages between camp and host economies. This finding is potentially important for refugee policies as well as for other types of development assistance, as donors find themselves under pressure to shift from in-kind to cash aid.

This paper evaluates the effects of annual fluctuations in weather on employment in rural Mexico to gain insight into the potential labour market implications of climate change. Using a 28-year panel on individual employment, we find that years with a high occurrence of heat lead to a reduction in local employment, particularly for wage work and non-farm labour. Extreme heat also increases migration domestically from rural to urban areas and internationally to the U.S. A medium emissions scenario implies that increases in extreme heat may decrease local employment by up to 1.4% and climate change may increase migration by 1.4%. This article is protected by copyright. All rights reserved.

Summary Access to international markets provides smallholders with unprecedented opportunities, but also exposes them to world market whims. We use a local economy-wide impact evaluation (LEWIE) model to analyze how the recent global saffron-price variability affected Morocco’s Taliouine–Taznakht region, a specialized agro-export economy with a stark gender division of labor. Prices of saffron increased by 71% per year over the 2007–09 period before falling quickly back to their trend. Our modeling approach allows us to simulate such shocks and evaluate impacts not only on producers but also on the local economies around them. In our simulations, positive price-shocks and increases in productivity both cause large reallocations of labor resources, particularly for female workers at harvest time. We use Monte-Carlo simulations to evaluate how saffron-price variance affects the economy. Female wage income is especially sensitive to global price variability: a 100% increase in saffron-price variance leads to 133% increase in female wage income variance, but only 36% for males. Accounting for general-equilibrium effects is critical for understanding the ramifications of exposure to export price volatility in poor economies.

Tourism is frequently promoted as a strategy for sustainable economic development in developing countries. However, the preferred methodology for empirically assessing tourism's economic impacts on local economies, applied computable general equilibrium (CGE) modeling, does not account for how tourism affects local natural resource stocks upon which many households depend. We develop a bioeconomic local CGE model to show how market-driven impacts of tourism expansion affect natural resource availability over time. We then show how changes in resource availability affect local incomes of different socioeconomic groups. We parameterize our model with household, business, and tourist survey data from a municipality in the Philippines. We find that tourism expansion increases local real incomes in the short run, but this causes a decline in a local open-access natural resource that erodes real incomes over time, particularly for households engaged in the natural resource sector. Different market integration contexts, as expressed through trade linkages, can mitigate natural resource decline, but this reduces the overall local economic benefit of tourism.

Climate change will affect water availability and its management, with more frequent and extended droughts, more severe floods, and lower water quality. Water allocation policies, regulations, and infrastructure in Mexico are not designed for changing future climate conditions. This chapter reviews the implications of climate change for water resources systems in Mexico and evaluates how management strategies from California can serve as potential adaptation schemes toward an Integrated Water Resources Management framework in Mexico.

A new generation of poverty programs around the globe provides cash payments to poor and vulnerable households. Studies show that these social cash transfer programs create income and welfare benefits for poor households and the local economies where they live. However, this may come at the cost of damaging local environments if cash payments stimulate food production that conflicts with natural resource conservation. Evaluations of the economic impacts of poverty programs do not account for the welfare consequences of environmental impacts, which are potentially large for poor communities closely tied to natural resources. We use an ex-ante policy simulation tool, a bioeconomic local computable general equilibrium model parameterized with microsurvey data, to analyze the expected welfare consequences of environmental degradation caused by a cash transfer program. For a Philippine fishing community that is a net importer of fish, we show that a government cash transfer program initially increases real incomes for all households. However, increased demand for fish leads to a decline in the local fish stock that reduces program benefits. Household groups experience declines in real income benefits of 2-63%, with fishing households suffering the largest declines. Impacts on local fish stocks depend on the extent to which markets link fishing communities to outside regions through trade. Greater market integration can mitigate the fish stock decline, but this reduces the local income benefits of cash transfers.

Many poor economies depend on open access resources for their livelihoods. Households in resource-based economies allocate their time and other factors between resource extraction and other activities. As a result, factors may shift from one sector to another as marginal returns change. This has two important implications. First, it implies potentially strong linkages between resource and non-resource sectors. Second, it means that unmanaged resources cause inefficient allocations of inputs across all sectors, and the effects of resource management spill into other sectors. We construct a local general equilibrium model that accounts for inputs that over-allocate to an open access resource and create a general equilibrium tragedy of the commons. This model describes resource rent dissipation more adequately in economies with mobile factors than a model with slowly dissipating rents. Perfectly mobile factors dissipate rent in every period, but endogenous wages cause labor and capital allocations to change with the resource stock. We use the model to illustrate medium-run impacts of a limit on capital in an artisanal fishery in Honduras. Simulation results reveal that fishery management has economy-wide impacts on prices and wages. Managers in developing countries thus should consider these linkages when implementing policies to conserve fish stocks.

Analysis of nationally representative individual-level panel data from 1980 to 2010 reveals a significant negative trend in the agricultural labor supply from rural Mexico, which is the primary source of hired workers for U.S. farms. These findings offer an explanation for the rise over time in U.S. farm wages. Concomitants of the agricultural transformation, including growth in the non-farm economy, falling birth rates, and an increase in rural education, accelerate the transition of rural Mexicans out of farm work. Higher U.S. farm wages and increased border enforcement slow the transition, but the combined impact of these offsetting variables is relatively small. A diminishing farm labor supply has far-reaching implications for farmers, farm labor organizers, rural communities, and agricultural workers.

As the farm labor supply from migrant-sending countries diminishes, the agricultural industry must seek out new farm labor substitutes. In previous years there was little incentive to invest in mechanical solutions to harvest more delicate fruits and vegetables that typically require some dexterity to harvest and that often do not ripen uniformly. Nevertheless, as farm wages rise and fewer workers come to work seasonally in the fields, the farm industry will discover increased incentives to invest in more challenging technologies, including robots in the fields. Robots will not replace the farm workforce entirely. Rather, the farm workforce of tomorrow will consist of more engineers, technicians, and mechanics. Increased agricultural capital will raise workers' marginal productivity and consequently workers'wages. This will generate benefits for workers and their families and the rural communities where they live. Nevertheless, the farm industry today must prepare for a changed farm workforce tomorrow.

A basic tenet of microeconomics is that people optimize. Firms maximize profits, subject to technology (the production function), and input and output prices. Consumers maximize utility, subject to their budget constraint, and the prices of the goods that bring them satisfaction or utility. In Chapter 2 we learned how to derive a labor demand function from farmers’ profit maximization. Households supply the labor to satisfy this farm labor demand.