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Labor Cost and Technology Adoption: Least Squares Monte Carlo Method for the Case of Sugarcane Mechanization in Florida

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  • Iwai, Nobuyuki
  • Emerson, Robert D.
  • Walters, Lurleen M.

Abstract

The prospect of immigration reform has renewed farmers’ concerns of serious labor shortages and cost increases, which may urge highly labor-intensive specialty crop farmers to switch to less-labor-intensive technology. The large-scale mechanization of the Florida sugarcane harvest during the 1970s/80s serves as an historical example of how technologies evolved due to changes in local labor market conditions. We analyze the dynamic decision-making process of sugarcane farmers in the relevant period using net present value (NPV) approach and real options approach (ROA) with least squares Monte Carlo (LSMC).

Suggested Citation

  • Iwai, Nobuyuki & Emerson, Robert D. & Walters, Lurleen M., 2008. "Labor Cost and Technology Adoption: Least Squares Monte Carlo Method for the Case of Sugarcane Mechanization in Florida," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6479, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea08:6479
    DOI: 10.22004/ag.econ.6479
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    References listed on IDEAS

    as
    1. Longstaff, Francis A & Schwartz, Eduardo S, 2001. "Valuing American Options by Simulation: A Simple Least-Squares Approach," The Review of Financial Studies, Society for Financial Studies, vol. 14(1), pages 113-147.
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    4. Iwai, Nobuyuki & Emerson, Robert D. & Walters, Lurleen M., 2006. "Legal Status and U.S. Farm Wages," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35335, Southern Agricultural Economics Association.
    5. Emerson, Robert D., 2007. "Agricultural Labor Markets and Immigration," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 22(01), pages 1-10.
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