Immigrant workers and technological change: An induced innovation perspective on Florida and United States agriculture

Technological progress in agriculture is important for the industry to remain competitive in the world market. A major question is whether or not the advancement in farm mechanization is inhibited by the availability of inexpensive foreign workers. The Immigration Reform and Control Act (IRCA), designed to reduce the number of unauthorized foreign workers, was passed in 1986. My study analyzes the impacts of changes in immigration policies and in labor markets on the rate and direction of technological change in Florida and the U.S. by applying the theory of induced innovation.;A new theoretical framework for profit-maximized induced innovation theory and definition of rates and biases of technological change are developed in this study. The profit function approach takes into account possible changes in output markets. The transcendental logarithmic profit function model is used for the econometric analysis. Homogeneity, symmetry, and curvature constraints are imposed. Curvature restrictions are imposed locally using the Wiley-Schmidt-Bramble reparameterization technique. The rate of technological change, bias of technological change, and Morishima elasticities of substitution are calculated from the parameter estimates.;Farm wages are observed to increase at higher rates than the prices of other inputs after IRCA. Although labor became more expensive, the technology significantly became more self-employed labor-using in both Florida and the U.S., and more hired labor-using in the U.S. after the passage of IRCA. The technological change did not significantly increase adoption of farm mechanization in either area. My study suggests that a more stringent immigration policy does not necessarily decrease the incentive to use hired labor. The limited adoption of farm mechanization may be the result of an increase in the supply of illegal immigrant workers and the belief that immigration policy will create a greater flow of immigrant workers in the future. The more rapid adoption of farm mechanization would require policies reducing the supply of labor at a given wage to agriculture, most likely accomplished by limiting access to foreign workers, legal or illegal.