Are the U.S. farm wages equalizing? Markov chain approach

This study investigates convergence in hired farm wages in U.S. counties over the period 1978-92. The time-invariant distribution of wages is characterized using Markov chains. This study is concerned with two questions: Are regional hired farm wages moving in the same direction? If so, are they consistent with the direction of the entire U.S. farm wages? Concerning with e¢ ciency in agricultural labor markets, the study approximates it to the extent that it is re�ected in farm wages. Time-invariant distributions of wages are calculated for the Northeast, Midwest, South, and West region, and for the entire U.S. The results support the hypothesis of convergence at regional level to lower-than-respective regional average wage. Convergence is the strongest in the Northeast and the weakest in the South. Likewise, convergence to lower-than-average wage is present at the U.S. level, but it is stronger than that at the regional level.