Health coverage and farmworker productivity

Abstract

Farmworkers are often subject to hazardous working conditions, experience a disparity in health insurance coverage, and are vulnerable to chronic health conditions and injury. Although recent health care mandates have improved access to healthcare, many agricultural employers still do not offer coverage for their employees. Because farmworkers tend to be seasonal, and sometimes migratory, worker health is often considered a common property resource. If farmers cannot retain the benefits due to offering worker healthcare coverage, the market for firm-provided coverage fails and workers are not covered. We estimate the economic value of offering health coverage to farmworkers and their employers using a structural search, match, and bargaining model. We find that farmworkers with employer-provided health coverage are significantly more productive than those without and, on average, generate an additional $\text{\$}0.85$ in economic surplus for each hour worked. Employers who offer health coverage retain an additional $\text{\$}0.65$ of economic surplus for each hour of work performed by their employees due to a health productivity premium, after accounting for the cost of offering insurance. Farmworker healthcare coverage, therefore, is not a common property resource and represents a viable strategy to attract, retain, and care for valuable employees.