The Food-Price Effect of H-2A Wage Mandates

Labor-intensive U.S. agriculture has long relied on foreign-born workers, so policies that raise their wages are likely to increase farm production costs. We estimate the causal effect of agricultural labor cost shocks on U.S. retail food prices. Our analysis centers on annual changes in the Adverse Effect Wage Rate (AEWR)—the federally mandated wage floor for H-2A temporary agricultural workers—set each year by the U.S. Department of Labor for 18 multi-state regions. We construct a county-level treatment intensity measure by interacting a predetermined migrant labor share from the 2002 Census of Agriculture with annual regional AEWR changes. Using this measure, we estimate dynamic price responses with a local projections difference-in-differences (LP-DiD) framework, drawing on Nielsen retail scanner data for twenty-seven food categories from 2006 to 2024. We then test whether pass-through from labor costs to retail prices is moderated by farm mechanization, immigration enforcement, and state-level import penetration. Our study provides the first reduced-form estimates of how AEWR-driven labor cost shocks transmit to disaggregated retail food prices across a broad set of food categories.