The minimum wage and seasonal employment: Evidence from the US agricultural sector

Abstract

Nearly 40% of agricultural workers in the United States earn an hourly wage that is within 10% of the prevailing state-level minimum wage. We evaluate the impact of the minimum wage on farm employment using county-level data from the United States Census of Agriculture. We employ long-differences specifications and find evidence of a dynamic, negative effect of the minimum wage on seasonal agricultural employment, but no effect on year-round agricultural employment. We estimate a long-run elasticity of total agricultural employment with respect to the minimum wage of about −0.40, which is both statistically and economically significant. Employers’ total expenditures on hired agricultural workers are not affected by the minimum wage. Finally, our analysis suggests that increases in minimum wages may lead to higher capital investment as well as the consolidation of farming operations in the agricultural sector.