US agricultural exports and labor market adjustments

Abstract

AbstractThis study empirically investigates the impact of US agricultural exports on farm and nonfarm employment and tests how individuals adjust to agricultural export shocks. Based on the data from 1991 to 2017 and a Bartik‐style instrument that exploits cross‐regional variation in agricultural export exposure stemming from initial differences in agricultural specialization and temporal variation in predicted US exports from exogenous tariff reductions, we find that a 1% increase in agricultural exports increases farm employment by 0.302% and has no statistically significant impact on nonfarm employment. The individual‐level analysis shows that, in response to positive agricultural export demand shocks, natives with a college degree are more likely to become self‐employed and start farm activities and while non‐natives without a college degree are more likely to become hired farmworkers. A back‐of‐the‐envelope calculation based on the estimates of agricultural trade elasticities of employment shows that on balance, job gains due to US agricultural exports are slightly larger than job loss due to agricultural imports, resulting in a net gain of around 0.24 million farm jobs over 1991–2017.