Buccola, Steven T.

Li, Cheng

English

Research Papers in Economics

 
 
Immigration and Agricultural Labor Market:   
A Case Study of Oregon Nursery 
 
 
 
 
 
 
Cheng Li  
Department of Agricultural and Resource Economics 
Oregon State University 
Corvallis, OR 97331 
Email: liche@onid.orst.edu 
 
 
Steve Buccola 
Department of Agricultural and Resource Economics 
Oregon State University 
Corvallis, OR 97331 
Email: sbuccola@oregonstate.edu 
 
 
 
 
 
 
Poster prepared for presentation at the Agricultural & Applied Economics Association 2010 
AAEA, CAES, & WAEA Joint Annual Meeting, Denver, Colorado, July 25‐27, 2010 
 
 
 
 
Copyright 2010 by Cheng Li and Steve Buccola. All rights reserved. Readers may make 
verbatim copies of this document for non‐commercial purposes by any means, provided that 
this copyright notice appears on all such copies. 2010-5-3
1
Immigration and Agricultural Labor Market: A Case Study of Oregon Nursery
Cheng Li and Steve Buccola
Department of Agricultural and Resource Economics, Oregon State University
Estimation Results
The simultaneous equation system illustrates the 
interactions between labor supply and demand as well 
as the effects of important exogenous supply and 
demand factors.  
Figure 1 Wage rate has positive effect on labor 
supply quantity, negative effect on labor demand 
quantity
Introduction
Despite the current, recession-led labor surplus, labor-
intensive farm sectors face persistent shortages of low 
and semi-skilled workers, most of them from south of the 
border.  Worker, producer, and government interests in 
farm labor policy are reciprocal and partly contradictory. 
Implications for Min Wage Policy
• Minimum wage policy in Oregon
- At $8.40 (in 2010), the Oregon minimum wage is  
higher than the federal minimum ($7.25 in 2009), and 
the second-highest in the U.S.
- It therefore is a positive attractant to farm workers. 
- We find a one-percent minimum-wage boost lifts the 
Implications for Ag Labor Market
• Depend on economic conditions
We examine the wage and labor-demand impacts of the 
U.S. housing industry, one of the main factors in nursery 
product demand.  
• Labor mobility
Workers can turn to other low-skilled jobs – such as in  quantity
• High labor supply elasticity (above 5.0)
Small wage-rate increases attract large numbers of 
Objectives
The major drivers of labor supply and demand in the 
Oregon nursery industry are
• Foreign-born workers: relocation decisions
• Nursery producers: technology and product-line     
- We find a one-percent minimum-wage boost lifts the 
mean wage workers demand by only 0.18% (from w to w’ 
in Figure 2).  Nurseries’ labor demand falls by 0.14% 
(from h to h’ in Figure 2).
Figure 2 Labor market equilibrium after positive 
and negative shock
Workers can turn to other low-skilled jobs – such as in 
construction, tourism, and catering – during the off-peak 
nursery season, then return during the peak.  Cross 
elasticity between construction and nursery labor supply 
is moderate but statistically significant.  
• Nursery size
Large nurseries generally pay higher average wage 
rates than do small nurseries .
Small wage-rate increases attract large numbers of 
additional foreign workers, consistent  with the 
ineffectiveness (also observed in our model) of U.S. 
border control efforts.  Labor supply is sensitive to 
macroeconomic conditions in the U.S. and Mexico. 
• Moderate labor demand elasticity (0.76)
Large wage-rate rises reduce labor demand quantity 
only moderately, consistent with inelastic final product 
demands and low substitutability between labor and non-
labor factors.  In particular, we find a rather low elasticity 
• Nursery producers: technology and product-line     
choices
• Government:  immigration & low-skilled labor policy
Methods
We estimate a simultaneous labor supply-demand model, 
using panel data from 61 nurseries, 1991-2008.   
• Labor supply
Conclusions
We develop a framework for identifying labor demand 
and supply in a simultaneous setting, and use it to 
analyze the effects of policy and other shocks on the 
nursery labor market. 
Workers:  The benefit of obtaining a U.S. job greatly 
exceeds foreign-born workers’ expected deportation and 
relocation costs.
• Minimum wage policy in Mexico
- The Mexican minimum wage is a measure of potential 
immigrants’ opportunity costs.
- One percent decrease in the Mexican minimum wage 
lifts Oregon nursery labor volume by 0.12% (h to h’’ in  labor factors.  In particular, we find a rather low elasticity 
between fertilizer prices and labor demand.
• Seasonal patterns
Seasonal factors in labor demand are only moderate, 
demand in the spring being 20% higher than in the fall.  
Wage rate workers demand is a function labor hours, 
border controls, immigration incentives, and labor 
policies.
• Labor demand
Labor hours nurseries demand are a function of wage 
rate, prices of alternative production factors, and final 
product demand.
relocation costs.
Nurseries:  Reducing nursery dependence on an 
unstable labor force would require substantial technical 
change in nursery production.
Labor Policy:  Boosting the Oregon minimum wage 
attracts more potential workers.  And because demand 
elasticity is low, labor demand quantity declines only 
moderately.
lifts Oregon nursery labor volume by 0.12% (h to h’’ in 
Figure 2) and reduces the mean wage by 0.09% (w to 
w’’).
- The very large gap between the Oregon and Mexican 
minimum wage ($8.40 vs. $0.57 in 2010) reflects the 
macroeconomic gap driving immigration.

Immigration and Agricultural Labor Market: A Case Study of Oregon Nursery

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