DO FARM-WORKERS EARN LESS - AN ANALYSIS OF THE FARM-LABOR PROBLEM

During the four decades extending from 1950 to 1960, the ratio of the farm to nonfarm wage fluctuated between 0.45 and 0.55. We employ the O axaca technique and the Public Use Microdata Sample of the 1990 Census to decompose the farm/nonfarm wage differential. We also use the Amer ican Chamber of Commerce Research Association (ACCRA) cost-of-living d ata to measure the impact of the farm/nonfarm cost-of-living index on the wage gap. First, we find that the observed wage gap is reduced by half when nominal wages are deflated by the (ACCRA) cost-of-living ind ex. Second, by applying the Oaxaca method separately to a subsample of young employees and a subsample of old employees we find that while f or the subsample of employees younger than thirty-five years the real wage gap practically vanishes, the gap for the subsample of employees who are thirty-five years of age and over is higher than that of the t otal sample. This finding lends strong support to the hypothesis that between 1950 and 1970 the process of farm out-migration was positively selective.