Farm Labor, Human Capital, and Agricultural Productivity in the United States

During the 20th century, U.S. agricultural employment fell in absolute numbers and as a share of total U.S. employment—the latter from 33 percent in 1910 to about 2 percent in 2017. According to USDA, Economic Research Service agricultural productivity data, total farm output almost tripled, and total labor use declined by nearly 80 percent in the last seven decades, implying that farm output per worker, a single factor productivity measure, grew. This report discusses the contribution of farm labor in U.S. agricultural growth and assesses the changing composition of the U.S. farm labor force with special attention to the changes in educational attainment among farm operators and other workers. The authors found that between 1948 and 2017, the decline in total labor hours worked accounted for -0.57 percentage points per year in annual output growth. These negative effects were partially offset by increasing labor quality, such as increased educational attainment. In the growth accounting frame-work, increased educational attainment accounts for about 8 percentage points of annual agricultural output growth. The average annual rates of labor productivity growth and total factor productivity growth would have been overstated by 13 percent and 8 percent, respectively, if labor quality changes were not accounted for in the measurement.