Employer-provided health benefits and employment decisions of US farm workers

Abstract

Purpose

The purpose of this paper is to investigate the impact of employer-provided health benefits (EPHBs) on labor supply decisions of documented and undocumented farm workers. By establishing a significant linkage between EPHB and farm work decisions, this study provides important implications for farm employment retention and the financial sustainability of farm businesses.

Design/methodology/approach

Using data from the National Agricultural Workers Survey, objective (actual) and subjective (expected) employment data are used as outcome variables analyzed under an ordered probit model, with the data pre-processed using the coarsened exact matching method to reduce endogeneity issues within the estimation.

Findings

Results confirm the influence of EPHB on farm workers’ decisions to remain employed on the farm as well as on the duration of their farm employment. Comparatively, EPHB significantly influences undocumented farm workers’ decisions on actual employment duration and subjective working expectations while documented workers seem to ascribe less importance to EPHB in their farm employment decisions.

Practical implications

This study provides important financial and business viability implications as the value of farm labor services retained through EPHB can translate to high opportunity losses, if ineffective. Alternative labor-saving strategies, such as mechanization, can only potentially lead to serious financial challenges for agribusiness firms, especially small-scale farm operations. This study emphasizes the need for more effective employment retention incentives for the sake of sustaining farm business viability.

Originality/value

This study presents empirical evidence on the important influence of EPHB on farm employment decisions, especially those made by undocumented farm workers, that have not been extensively explored in literature.

Citation

Luo, T. and Escalante, C. (2017), "Employer-provided health benefits and employment decisions of US farm workers", Agricultural Finance Review, Vol. 77 No. 3, pp. 358-375. https://doi.org/10.1108/AFR-12-2016-0092