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Abstract

Immigration enforcement policies, such as E-Verify have a negative effect on the supply of farm labor. There is a growing literature that finds that agricultural producers are facing a shrinking labor supply and fewer studies examine how agricultural producers are adjusting to having less labor. This study examines how a shrinking labor force affects agricultural production decisions, specifically in terms of which crops to produce. We use state level E-Verify enforcement laws as a quasi natural negative labor shock. With less labor it is more challenging for agricultural producers to produce labor intensive crops which do not have available technology to substitute for labor. We find that in states that have enforced strong E-Verify laws, production of labor intensive crops decline and there is an increase of capital intensive crops. Based on our results, the opposite is true for weak E-Verify states.

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