[Adam Ozimek]




The economics here aren't particularly complicated, and I'm sure they won't be new to the sophisticated readers of the Atlantic, but they are useful to look at and consider explicitly when thinking about issues like this. 

It goes like this. If you're not going to let illegal immigrants do the jobs they are currently being hired to do, then farmers will have to raise wages to replace them. Since farmers are taking a risk in hiring immigrant workers, you can bet they were getting a significant deal on wage costs relative to "market wages". I put market wages here in quotations, because it's quite possible that the wages required to get workers to do the job are so high that it's no longer profitable for farmers to plant the crops in the first place. The simple labor market supply and demand curves below illustrate exactly what I'm talking about.

oz pic.JPG


Importantly, the more competitive the final goods market (meaning the market for the product that the workers are being hired to make) the flatter the labor demand curve will be. If the market is competitive, then a small increase in prices will cause buyers to shift to a competitors products. This means that a firm's (or in this case, a farmer's) profits are sensitive to small shifts in input prices. In the case of agriculture, where one farmers crops are usually very comparable with another farmers, the market will be highly competitive and the demand curve will be flat. This problem is even more exacerbated when the demand is for Georgia farmers in particular, since retailers who buy their products can shift to farmers in competing states. 
