Employment and payroll dynamics in support services for agriculture

Abstract

AbstractAn increasing share of agricultural production activities on farms are undertaken by specialist providers. Despite its importance to the farm economy, because of gaps in the federal statistical system, relatively little is known about how this industry has evolved over the past three decades. In this article, we document establishment, employment, payroll, and wage dynamics for businesses that provide support services to crop production. Our analysis reveals that agricultural support service is a uniquely dynamic and rapidly evolving sector of the American economy. Although rates of entry have fallen substantially, large incumbent firms have tended to grow in size. Furthermore, the real annual mean wage to nonagricultural workers employed in the sector has increased by nearly $10,000 since 1992, indicating sizeable growth in labor productivity. Nonetheless, standard measures of economic dynamism, a principal source of productivity growth, have all fallen, which may have implications for innovation and the long‐term health of this industry and agricultural production more generally.