metadata: authors: 0: author: Jarvis, Lovell; Vera-Toscano, Esperanza
count: Chile
docna: 0: docna: The impact of Chilean fruit sector
            development on female employment and household income
docty: Policy Research Working Paper
subtopic: Labor Markets,Gender and Development,Employment and Unemployment,Rural Labor Markets
teratopic: Health, Nutrition and Population
abstracts: cdata!: Modern fruit sector development in Chile
            led to agricultural employment for women, though usually
            only as temporary workers and often at a piece rate.
            Nonetheless, fruit sector employment offered women access to
            income and personal fulfillment previously lacking. The
            authors link the fruit sector to improving female and family
            economic welfare in rural Chile and changing gender
            relations. Using a unique longitudinal data set, they
            examine women's decisions regarding labor force
            participation and employment, their earnings and
            contributions to household income, and their attitudes
            toward employment to understand how new opportunities are
            changing women, their households, and the rural sector.
geo_reg_key: 119228,517191
repnme: repnme: The impact of Chilean fruit sector
            development on female employment and household income
display_title: The impact of Chilean fruit sector
            development on female employment and household income
listing_relative_url: /research/2004/04/3541498/impact-chilean-fruit-sector-development-female-employment-household-income
topicv3: Labor Markets m1326488 855,Gender m1327621 615,Jobs m1503931 2670,Labor Force Participation m1504050 2746,Unemployment m1504051 2747
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: Health, Nutrition and Population
no_of_pages: 41
model_extractions: 3263

**The Impact of Chilean Fruit Sector Development on Female Employment and Household Income**

Lovell Jarvis and Esperanza Vera-Toscano _Department of Agricultural and Resource Economics_ University of California, Davis We thank Constance Newman, who collaborated in the collection and preparation of survey data, Fernando Carulla, Alex Ladrix, Marco Luraschi, Oscar Melo, Hernan Soto, Melissa Leung and Valerie Thresher for research assistance, and the packing shed managers and workers who provided information. Wendy Cunningham provided helpful comments. The authors are grateful to the World Bank-Netherlands Partnership Program's Economic Policy and Gender Initiative for research support. Lovell Jarvis is also grateful for support from a Fulbright Research Award, the Joint Committee on Latin American Studies of the Social Science Research Council and the American Council of Learned Society, with funds from the Ford Foundation, the University of California, Davis, and the Corporacion de Investigaciones Economicas para Latinoamerica (CIEPLAN), Santiago, Chile.

World Bank Policy Research Working Paper 3263, April 2004

> _The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._
**The Impact of Chilean Fruit Sector Development on Female Employment and Household Income**

# **Abstract**

Modern fruit sector development in Chile led to agricultural employment for women, though usually only as temporary workers and often at a piece rate. Nonetheless, fruit sector employment offered women access to income and personal fulfillment previously lacking. This paper links the fruit sector to improving female and family economic welfare in rural Chile and changing gender relations. Using a unique longitudinal data set, we examine women’s decisions regarding labor force participation and employment, their earnings and contributions to household income, and their attitudes toward employment to understand how new opportunities are changing women, their households, and the rural sector.

_Keywords: South America, Chile, female temporary labor, fruit sector, gender, welfare_

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# **The Impact of Chilean Fruit Sector Development on Female Employment and Household Income**

# **1. Introduction**

Modern fruit sector development in Chile began in the mid-1960s and accelerated in the mid-1970s in response to government land and economic reforms, rising international demand, and the transfer and adaptation of fruit technologies that greatly increased the profitability of fruit production (Jarvis, 1992, 1994). Given its Southern Hemisphere location, Chile found ready markets in developed countries of the Northern Hemisphere. Labor was cheap relative to that of its main competitors (Australia, New Zealand, Argentina and South Africa) and Chile developed a system that utilized substantial labor in the orchard and in post-harvest to improve fruit quality and prepare it for relatively lengthy transit to Northern Hemisphere markets. While demand for labor rose along with fruit output and although labor was inexpensive, Chilean fruit producers often had difficulty obtaining sufficient workers, particularly for the packing plants during the harvest season. As a result, women, who traditionally had not worked in agriculture on a salaried basis found new employment opportunities as temporary laborers in the fruit sector.

A substantial number of women began working in table grape packing plants in the late 1960s. However, the real growth in the number of female workers occurred during the late 1970s and the 1980s. Throughout the decade that followed the military coup in 1973, policy reforms resulted in significant disruption within the agricultural sector, temporarily reducing agricultural labor demand and agricultural wages (Jarvis 1985). In particular, two severe economic recessions, in 1975-76 and 1982-83, caused

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high levels of aggregate unemployment that only gradually declined. Moreover, about 50,000 male workers, who had been employed in the reform sector, composed of farms that had been expropriated during the land reform implemented during the Frei and Allende administrations, were abruptly dismissed without land or employment in the late 1970s, when the reform sector land was redistributed to others. As men lost work and suffered reduced incomes, other family members (i.e. women) sought employment whenever and wherever possible. Economic and political circumstances were very difficult during this period for many rural families. Though the fruit sector was growing rapidly, it was still relatively small as a proportion of agriculture and its impact on agricultural employment was limited.

Most early social science commentary regarding fruit sector female employment was negative (e.g., Lago). Several scholars hypothesized that women had entered this sector only because the male workers in their households had been unable to find employment, i.e., that women were forced to take unattractive employment. Some argued that female workers were exploited by being offered only seasonal employment, at low wages or, frequently, on a piece rate basis that encouraged women to work lengthy hours at a rapid pace, competing with each other for a fixed amount of raw material.

By the late 1980s and early 1990s, evidence from sociological studies began to emerge showing that the fruit sector offered women opportunities for employment, income and personal fulfillment that were previously lacking (Rodriguez and Venegas, Venegas). Work allowed women to achieve greater independence and voice within their households and to significantly improve their household’s standard of living. Also, numerous women who entered the labor force only as summer agricultural workers began

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to seek work throughout the year, though employment opportunities in rural areas remained scarce for women during many months of the year. Some women used what they learned in agriculture as a stepping stone to better quality employment, moving to urban sector jobs in commerce and manufacturing rather than as maids—the traditional employment of most young women who made the rural-urban migration. Others managed reasonable employment through a series of jobs throughout the year. Still others worked only several months a year and others were frequently unemployed.

This paper uses a longitudinal Chilean data set collected in 1992 and an economic analytical framework to link the fruit sector, as a provider of female seasonal employment, to changes in household economic welfare and the transformation of gender relations in regions of rural Chile. Using results from prior studies, we examine women’s decisions regarding labor force participation, earnings and employment, and report new information on women’s attitudes toward fruit sector employment, how they utilize the income earned, and how their income contributes to household income. Thus, the analysis provides additional evidence on how new employment opportunities are changing women, their households, and the rural sector.

This paper adds to the existing literature in a number of ways. First, it uses formal statistical approaches to update and extend previous sociological/historical studies, including several more recent ones, e.g., Barrientos et al.; Bee, Bee and Vogel; and Matear, seeking to determine how fruit sector development has affected women and their households in rural Chile. Second, the availability of a data set collected with unique characteristics allows such a quantitative study. Detailed day-by-day information, collected for one full year regarding participation, earnings, and employment, as well as

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personal and family related characteristics of each worker, allows us to explicitly address the functioning of the Chilean seasonal fruit labor market. Lastly, our study is of special interest for the Chilean economy since the decline in the number of permanent agricultural workers in recent decades and the growth in the number of temporary agricultural ones has raised policymakers’ concern that changes in labor market structure have reduced rather than increased the welfare of agricultural workers (Cox, et al., Gómez.and Echeñique **,** Schurman) and may have reduced efficiency.

# **2. Background on the Evolution of Fruit Sector Employment in Chile**

The Chilean fruit sector grew dramatically after 1973. The total area planted increased from around 66,000 ha in 1974 to 178,000 ha in 1992, and fresh fruit exports increased about 20 percent annually during this period (DEP, from CIREN-CORFO, INE). By the early 1990s, table grape production accounted for roughly half of all fresh fruit exports and was the most labor intensive of the major fruit crops. In terms of employment, the agricultural sector accounted for about 17 percent of the national labor force, while fruit production, per se, absorbed around 25 percent of the labor employed in agriculture.

The demand for fruit sector labor was highly seasonal (Jarvis and Vera-Toscano). Chilean fruit farms employed a small number of relatively skilled workers on a permanent basis (paid on a monthly wage) and hired a larger number of less skilled workers on a temporary basis to undertake specific tasks when needed. The permanent workers handled daily tasks and helped supervise the temporary workers. Temporary workers were usually paid on a piece rate or contract basis in order to provide better incentives, lessen supervision costs and incorporate a heterogeneous labor force.

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Temporary work has been increasing relative to permanent employment in agriculture and especially fruit production. For example, Gómez, S. and J. Echeñique (1988) estimated that the total permanent agricultural labor force fell from 208,000 to 120,000 between 1964 and 1987, while the total temporary agricultural labor force increased from 147,000 to 300,000 in the same period.<sup>1</sup> Fruit production is concentrated in specific geographical areas. Workers are generally unwilling and unable to migrate from one area to another for short periods. Accordingly, in many areas the fruit sector has demanded more labor than the traditional labor force has been able to supply during the summer months.<sup>2</sup> The shortage of labor during the peak season encouraged employers within the fruit sector (mainly in the packing sheds) to develop mechanisms to attract, motivate and compensate workers for seasonal work. Piece rate pay emerged to facilitate the incorporation of heterogeneous workers into the labor force, while also providing direct motivation to increase effort over a longer workday. A growing number of women were attracted to work in the fruit sector. By the early 1990s, we estimate that female employment in the fruit sector amounted to roughly 30% of total fruit sector employment. Notwithstanding, women

> 1  Official data on many aspects of agricultural employment are lacking or of poor quality.  Definitions change from period to period, and from study to study.  Comparisons are thus difficult to make.  Assertions should often be treated as working hypotheses.

> 2 For example, Yaksic (1986) estimated that the table grape sub-sector in the Provinces of San Felipe and Los Andes required labor equal to only about 3 percent of the locally available labor in the months of April and May, 1983, but needed absolutely more workers than were locally available during the month of February. However, Newman and Jarvis encountered few truly migratory workers among the packing shed workers in the three areas surveyed during January-February, 1992.  It may be that Yaksic’s estimates were in error, or that the local labor force grew significantly between 1983 and 1992.  Although the temporary labor force in northern valleys, such as Copiapo, has long depended mainly on migratory workers, in other areas the labor force is composed overwhelmingly of workers from local rural and urban areas who travel daily from home to work and back (Venegas).

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worked almost exclusively as temporary laborers, usually in tasks paid on a piece rate basis, and often at a time rate during the slack season.<sup>3</sup>

# **3. Data Overview**

The study utilizes primary data collected from a random sample of workers in 56 table grape packing sheds during the harvest season (mid-January to mid-March) of 1992.<sup>4</sup> The sample consists of 690 individuals. Data were collected regarding productivity and pay in the task they were performing at the time interviewed, as well as other information regarding age, education, work experience, household demographics, and household income, plus opinions and preferences regarding many aspects of work experience. We also obtained data regarding each worker’s labor force participation, employment, and earnings, daily throughout 1991.

We sampled only workers who were employed in one of four tasks in which workers were normally paid on a piece rate basis.<sup>5</sup> Three tasks were carried out primarily by females: classifying grapes by size and color ( _selección_ ), cleaning grapes prior to packing ( _limpieza_ ), and packing grapes in boxes for export ( _embalaje_ ). All workers in the fourth task, nailing lids on boxes of packed grapes and binding these boxes on pallets ( _tapado_ ), were male. Although packing plant tasks tended to be gender specialized, they were not rigidly divided by gender.<sup>6</sup> Plant level data suggest that shed managers developed strategies regarding the type of worker that they wished to hire, presumably

> 3 Venegas estimated that women accounted for only 5 percent of permanent fruit workers, but 52 percent of temporary workers in 1990. Her data show clear gender segregation between permanent and temporary work, with women concentrated into less secure, short-term employment.

> 4 These sheds were located in three regions: Santa Maria, Buin/Paine, and Lontue.

> 5 Roughly two thirds of all jobs in a packing shed are paid on a piece rate basis, with the rest paid a wage. About half of the workers interviewed in 1992 reported having been employed in a “wage” job during the 1991 harvest season. Thus, a significant number of workers in our sample that were not piece rate workers in the 1991 harvest became piece rate workers in the 1992 harvest.

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adapting this strategy in keeping with the availability of labor and the characteristics of the shed (e.g., the piece rate paid, fringe benefits offered, and grapes processed) (Newman and Jarvis).

Table 1, taken from Jarvis and Vera-Toscano, reports general characteristics of the workers surveyed at the time of the interview (Jan-Mar 1992). The labor force was relatively young, with most between 15–34 years old. Men tended to be slightly younger than women. As all women in our sample were engaged in piece rate work in 1992, the data suggest that most piece rate workers sought wage work or dropped out of the labor force as they aged.<sup>7</sup> The labor force was also relatively well educated; 66% of women and 85% percent of men had completed secondary school. Table 2 shows that the average level of education declined as age rose. This changing educational profile probably reflected the steady improvement over time in rural educational opportunities (especially for women) during the last 35 years. That women with secondary education accepted these temporary, manual jobs suggests that employment opportunities are limited for many rural females even after acquiring considerable schooling.

Female workers have a significantly higher number of children, on average, than their male counterparts and about half of female workers and about a third of male workers are married. A small proportion of workers are students, 12% of women and 15% of men, who generally worked only during the summer.

Each worker surveyed was asked to sequentially list all periods of employment during 1991 (first and last day of work in each job), the task performed, the location and

> 6 Workers of both sexes were seen in every task. Survey respondents were asked whether someone of the opposite sex could perform their task and a high proportion said yes.

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economic sector of the job, whether they were paid a wage or piece rate, the daily wage and/or the total amount earned, and when they had been in the labor force. Using this information, we determined labor force participation,<sup>8</sup> when the worker was employed,<sup>9</sup> and the wage or average piece rate earnings when employed.

Table 3, also from Jarvis and Vera-Toscano, presents additional labor related information. Both men and women averaged about 5 separate jobs per year, with the number slightly higher for men. Men worked more days during the year (265 versus 166), mainly because men worked steadily throughout the year while women averaged sharply fewer days per month during the slack season (Figure 1). Women reported working, on average, less than 10 days a month during five months (May –September) compared to 15 to 21 days per month during the peak season. Although a significant proportion of the individuals surveyed lived in or close to towns, roughly 85% of the jobs reported by this sample of workers were in agriculture. Females had greater packing shed employment experience than males.

Most workers lived in households with several workers. Twenty-five percent of the females surveyed and half of the males provided more than 50% of their household’s annual income. Only a third of the females who were widows or separated were their

> 7 When analyzing a 1983 sample of California agricultural workers, Rubin and Perloff found that a higher proportion tended to seek piece rate employment when they were young or old.  However, the bulk of piece rate workers in their sample were relatively young.

> 8 Information on Labor Force Participation was collected for every day in 1991.  However, since some workers were employed on a monthly basis during at least part of 1991, we arbitrarily (after some descriptive analysis) used observations only from the second Tuesday of each month. Thus, the sample contained 12 observations for each worker and a total of 7188 observations.  On average, workers in this sample participated in the labor force 72% of the time.

> 9 Workers were asked to indicate whether there were any periods during which they had not been in the labor force.  Next, they were asked whether, for those periods when they claimed to have been in the labor force, they had actively looked for work.  Finally, they were asked whether they had looked for work locally, regionally and/or nationally. The latter questions were intended to cause them to reflect on whether and how hard they had looked for work. Workers were categorized as being unemployed in a given period only if they had declared themselves to be in the labor market and actively looking for work.

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household’s major earner (Table 4).<sup>10</sup> Still, interviews indicated that many women had been able to separate from their husbands and/or live apart from their parents because of income obtained as a temporary fruit laborer. Although female-headed households tended to have lower incomes than male-headed households, many female heads of households spoke with satisfaction that their work allowed them to support themselves.

Surprisingly, women had higher average daily earnings than did men. Women worked more frequently on a piece rate basis (36% of female jobs, vs.14% of male jobs; Figure 2), which paid more than comparable wage employment, and women were employed primarily during the peak season, when earnings were highest.

Worker’s household characteristics influenced the number of days employed each year. Figure 3 shows that married men worked the most, especially if they had young children, approximately 275 days per year.<sup>11</sup> Single males worked much less, about 170 days. Men who were separated or widowed worked an amount intermediate between these levels. The significant affect of marriage on the number of days worked suggests that marriage affected the motivation to work and that search effort was an important determinant of employment.

Women averaged significantly fewer days worked per year than men did. Some women worked more than 220 days per year, but none of the categories shown had such a high average. Women also showed less variation in the number of days worked with respect to their household situation, at least as here categorized, and the variation shown was directly reversed from that of men. For example, married women with young

> 10 Chile has no legalized divorce, but separation is common.

> 11 Work periods reported include weekends.  Workers sometimes worked on weekends, but not always. We assume that workers were employed roughly 5.5 days per week, or 80% of the days reported in each “employment period.”

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children worked the least of individuals in the sample, while single women who were not living with their parents (but who had young children) worked the most of all female categories. There is thus evidence that married women with young children had a higher reservation wage (see also Jarvis and Vera-Toscano) than other workers. However, women lacking income from a husband or parents worked substantially even when they had young children.

# **4. Employment Patterns and Seasonality of Labor Demand**

Female labor force participation varied greatly by season, declining sharply from February to May, remaining low through September, and then rising steadily to February. Labor force participation was less variable for males. Daily earnings varied seasonally more in agricultural than in non-agricultural jobs, especially for jobs held by women. Women tended to earn more than men in agricultural jobs during the peak season, but less during the slack season, while the situation was reversed for non-agricultural jobs.<sup>12</sup> As agricultural wages declined, a rising proportion of workers was employed in nonagricultural jobs (from 5% to 30%).

While female temporary workers face greater wage variation than men and vary their labor participation more, they also suffered substantially more unemployment (Figure 6). The female unemployment rate exceeded 50% during five months. Male unemployment was also high, but averaged only about half as much.

# _4.1. Labor Market Participation Equation and Expected Earnings_

> 12 Average Daily Income for workers not employed at a fixed daily wage was calculated by dividing total income earned in each job (per month, if the job spanned more than one month-workers were able to report their monthly earnings for piece rate jobs) by the number of days the worker was employed. Some of the seasonal decline in average daily income was probably due to fewer daily hours worked in the winter.

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Jarvis and Vera-Toscano explored the adjustment in this market for temporary agricultural labor in order to identify whether differences in labor force participation between seasons was attributable to the existence of specific ‘barriers’ to employment within these markets, differences in preferences or merely from differences in observed characteristics. Specifically, they modeled labor force participation for male and female workers by estimating a random effects probit that allows for unobserved heterogeneity in preferences. Table 5 reports the results. For women, the estimated coefficients on the explanatory variables were generally highly statistically significant and in line with prior expectations, but few of the estimated coefficients were statistically significant for men (see first and second column of Table 5). The results for men were consistent with the relatively constant male labor force participation rate, though the smaller number of male observations and the relative homogeneity of male respondents may have contributed to the lack of significant coefficients.

Women participated in the labor force less than men did. Female labor force participation increased with age. Since rising education was associated with higher daily earnings, education may have altered the preference for work versus leisure. School attendance reduced participation for males and females when schools were in session.

The results again showed that marriage reduced labor force participation for females, perhaps due to increased household responsibilities and/or a social-cultural bias against work, but did not affect male participation. Female labor participation declined as the number of the worker’s children aged 0-5 years increased, but this effect was reduced if another adult female lived in the household, suggesting that childcare was gender specific. The resulted also pointed to the importance of (household) childcare for female

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labor force participation. Both men and women were more likely to participate during the peak season and less during the slack season as compared to the transition months of April and October through December, a result probably linked to expected earnings.

Jarvis and Vera-Toscano examined the sensitivity of labor force participation decisions to changes in expected earnings using a probit equation that included the same regressors plus estimated earnings (see third and fourth columns in Table 5). The coefficient on expected earnings was positive and significant and the other coefficients were closely similar to those obtained in the first and second columns of the Table.<sup>13</sup> Labor force participation for men and women responded strongly and positively to the expected wage. The female participation rate varied substantially more than the male rate because females tended to have a higher reservation wage. Nonetheless, female unemployment was generally much higher than male unemployment (Figure 6). _4.2. Open unemployment_ Although wages varied greatly by season, Jarvis and Vera-Toscano found they did not vary sufficiently to fully equate the supply and demand of labor and achieve zero unemployment. Jarvis and Vera-Toscano advanced four factors as likely to explain the high unemployment found. First, there was probably a relatively large component of frictional unemployment as a result of individuals entering and/or leaving the labor force, changing jobs, and searching for employment in a spatially dispersed market where jobs were relatively short lived and search costs relatively high. Second, many or all firms may have paid an efficiency wage or piece rate (Weiss; Akerlof and Yellen; Solow) to motivate workers, thereby causing the unemployment rate to remain above zero even

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during periods when labor demand is high. Third, the average reported wage in agriculture lay above the average reported wage in the non-agricultural sector throughout the year. Thus, waiting for an agricultural job could easily have been the better strategy for most workers even when few agricultural jobs were available. Fourth, some workers, especially females, may incorrectly report having been in the labor force and actively seeking work. Alternatively, they may have considered themselves in the labor force, but searched only within a small, local area, where there were no jobs.

# **5. Determinants of Daily Earnings**

The average wage rose by about 50% from the slack season to the peak season. This evidence refuted the view that the wages of temporary agricultural workers in Chile were relatively rigid. To understand the determinants of changes in daily earnings over the one-year period, Jarvis and Vera-Toscano estimated an earnings equation where the dependent variable was the log of average daily earnings and the regressors included both supply and demand side factors. Human capital variables such as education and experience were hypothesized to influence worker productivity and earnings, while monthly dummies reflected the net influence of seasonal fluctuations in agricultural labor supply and demand. Wages also were hypothesized to vary in response to the worker's decision to seek either piece rate or wage employment, and either non-agricultural or agricultural employment. Such choices were assumed dependent on a worker's willingness to supply effort and preference for factors such as work environment and a shorter commute time to work. Since dummy variables were used to measure the effect of

> 13 There is some question whether the inclusion of expected earnings leads to inconsistent results (Mark Harris, personal communication), but we see a potential advantage from including directly the wage variable which is likely to have the great effect on seasonal fluctuations in labor force participation.

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working at a piece rate as opposed to a wage, the other coefficients measured the effect of the respective independent variables on the daily wage.

Consistent estimates of the earnings function were obtained using the two-step estimator proposed by Vella and Verbeek. The results for both men and women are reported in Table 6. The earnings function equation performed well if judged by the statistical significance and sign of the estimated coefficients and the relatively good fit of the equation. The earnings of both men and women increased with schooling suggesting that education significantly increased labor productivity in agricultural work, although the higher return was probably partly due to the innate ability that allowed individuals to successfully complete additional schooling. Experience also had a significant positive impact on female daily earnings in jobs throughout the year; the analogous coefficient was not significant for males. The square of experience had a significant negative coefficient, indicating that rising experience had a non-linear effect.

Dummy variables were used for each month to measure the effect of seasonal changes in labor supply and demand on daily earnings. The omitted period is the month of January, which constitutes a peak season month.

A dummy variable was also used to measure the earnings effect of working on a piece rate basis. A piece rate system was frequently used to motivate and remunerate temporary agricultural workers in the fruit sector and a substantial theoretical literature indicates that the piece rate system increases worker’s productivity and workers’ incomes (Gibbons; Lazear, 1986; Pencavel; Stiglitz). However, there have been few empirical

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tests. The estimated coefficient on the piece rate dummy indicates that piece rate jobs earn a daily premium of about 12 percent relative to wage jobs.<sup>14</sup> A dummy variable was also used to measure the effect of working in the agricultural as opposed to the non-agricultural sector. Agricultural work paid substantially more than non-agricultural work, particularly for women (Figure 5). Men’s wages in this sample were about 18 percent higher when working in agriculture, while women’s wages were about 37 percent higher. Agricultural jobs were probably still more attractive for women since there were few piece rate jobs available in non-agricultural work.

As earlier noted, women’s average daily earnings were higher than men’s average daily earnings (see Table 1). Women working as temporary agricultural laborers were thought to earn relatively high wages in the Chilean fruit sector and the results in Jarvis and Vera-Toscano supported that view (Rodriguez and Venegas). Nonetheless, women earned substantially less than men did in wage employment, once their earnings were adjusted for observed and unobserved characteristics. The estimated gender wage differential was about 25 percent.

Although females have higher average daily earnings than men have, women earn less than men do when working for a wage, but not when working on piece rate basis. The wage differential could result from (unobserved) differential skills, strength, effort or aptitude, particularly are results field work, when relatively more wage work is performed. The differential could also indicate discrimination in the wage market, particularly, since discrimination should be less likely when workers are employed on a

> 14 The choices of whether to work at piece rate or wage, and in the agricultural and non-agricultural sector, are endogenous to the determination of daily earnings, but Jarvis and Vera-Toscano lacked instruments

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piece rate basis (unless workers are denied access to such jobs) since pay is directly linked to each worker’s productivity. While the cause of the differential is unclear, its large magnitude suggests an area for further investigation.

# **6.  Gender specialization in work tasks**

Both men and women worked in each of the piece rate tasks from which the Jarvis and Vera-Toscano sample was drawn. Workers of both sexes were asked and generally specifically replied that workers of the other sex could do their task equally well. Nonetheless, the workers in each of the tasks were largely of one gender. The tasks could be gender type because productivity in each task is linked to a gender-related attribute. For example, it might be argued that most women excelled at the tasks of cleaning and packing grapes because they possessed greater finger dexterity, paid greater attention to detail, had better eyesight--particularly as related to color discrimination, and perhaps possessed a greater willingness to endure long periods of work in a stationary position, relative to men. Nonetheless, based on anecdotal information received during interviews and observation, Jarvis and Vera-Toscano believed that men and women tended to prefer for social reasons to work with others of their same sex. The sharing of jokes and casual conversation, as well as life experiences and daily concerns was particularly important to the women interviewed.

# **7.  Women’s Knowledge of Work Opportunities and their Work Choices**

Newman and Jarvis (2000) found that women were highly informed about many aspects of the packing shed jobs that they accepted, e.g., shed-related characteristics that affected workers’ productivity, fringe benefits, and the expected duration of the job, and their willingness to accept work at a specific piece rate was strongly influenced by these allowing them to treat this endogeneity.

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aspects. Indeed, piece rates for the same tasks were found to vary by as much as 100% among different packing sheds and these differentials were well explained econometrically by the observed heterogeneity of workers and firms.

For example, most processing sheds provided workers with some combination of fringe benefits that included meals, snacks, transportation to and from work, childcare, interest-free loans, and higher quality bathrooms. Sheds also provided different quality work environments in terms of worker treatment by supervisors and managers. According to the theory of equalizing wage differentials, sheds that provide more and better fringe benefits and/or a better work environment should have paid lower piece rates. This hypothesis was supported by the data.

Similarly, Newman and Jarvis hypothesized that firms’ investments in technology, improved plant organization or the ability to process grapes that were in better condition would raise worker productivity. Further, so long as workers were aware of firm-influenced productivity differences, such higher productivity should lead to lower, not higher piece rates. To the extent that firms possessed improved technology that allowed their workers to achieve higher productivity or were better organized and could provide a constant flow of good quality grapes to workers, allowing workers to process more boxes per time period, the firm should pay a lower piece rate. This followed from the assumption that each worker should earn an income consonant with her opportunity cost in equilibrium. If a firm’s characteristics allowed its workers to produce more output, _ceteris paribus_ , worker competition for the jobs at the firm should have caused the piece rate to decline until its workers’ incomes were equal to what they would earn elsewhere. This hypothesis was also supported by the econometric results.

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Workers could easily ascertain the piece rates paid by different firms, but the effect of firm characteristics on a worker’s productivity should have been harder to predict. Firms that had made investments that led to higher worker productivity should have wanted to advertise that information in order to convince workers that they should accept a lower piece rate, while firms that had not should have wanted to hide the fact. Newman and Jarvis also found that piece rates were adjusted in many packing sheds if the quantity and/or quality of the grapes being processed changed. Although strikes were legally prohibited, female workers were able to “stop” production and successfully negotiate an increase in the piece rate, and the reverse was also true. Indeed, several male shed managers said that they found it easier to negotiate a “fair” piece rate with women than to negotiate pay with men.

The evidence in Newman and Jarvis suggested that women workers were both aware of the importance of firm-influenced productivity differences and able to obtain information about what firms actually provided. Thus, there was evidence that female workers operated within and were part of a highly sophisticated labor market in which firms and workers obtained and used information regarding about their heterogeneity. Neither workers nor firms thought that firms or workers were homogeneous.

# **8. Attitudes toward Work**

Each worker was asked how many months he/she would have liked to work during 1991 and 1992. The mean response by females was 11.1 months and 9.7 months, respectively. The responses were surprisingly high, given that most women had worked much less than this in 1991. The question did not specify a wage at which they would be

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employed, but the responses suggested that most women wanted to work most of the year.

To further explore workers’ preferences for seasonal as opposed to permanent employment, including a specified wage, workers were asked to indicate her/his preference for one of three employment options: 1) 3 months employment per year at 100,000 pesos per month, 2) 6 months employment at 60,000 pesos per month, and 3) 12 months employment at 35,000 pesos per month. Option 2) required twice the time to obtain an additional 60,000 pesos of annual income, as did option 3). When designing these options, we believed that a large proportion of women preferred to work only the summer months and thus would choose the first option. In fact, 50% of workers chose permanent employment as their preferred option and an additional 25% choose the 6- month option. Only 25% choose the 3-month high-salary option, even though its 100,000-peso salary turned out to significantly exceed the monthly earnings of most workers during even the peak season.

What do these answers mean? We believe, based partly on respondents’ anecdotal comments, these answers also suggest that most female temporary agricultural laborers want to work most of the year. First, most women wanted to earn more, even if the marginal earnings associated with longer employment were low. Second, some women expressed a desire to spread their income throughout the year and thought that a permanent salary would help achieve this. They commented on how hard it was for them to adequately carry funds from one month to the next given a lack of accessible savings institutions<sup>15</sup> and constant pressure from friends and relatives for loans and assistance.

> 15 Chilean banks are very restrictive in terms of who is permitted to open a savings or checking account.

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Third, many women said that they enjoyed working, particularly as it allowed them to feel productive, benefit economically, and have greater social contact with others.

When asked what they liked about their work, some women responded simply that they enjoyed (or did not enjoy) it. However, most provided additional insight into what the work experience meant for them. Some responded that work allowed them to financially help their families, others that they enjoyed socializing with other women, having an opportunity to talk about their problems, possible solutions, and simply their concerns, and to form personal connections that they could not otherwise make. Others were glad simply to feel useful.<sup>16</sup> Having said that women wanted additional employment, they were not idle. Combining employment and family responsibilities placed a harsh demand on women’s time and energy. Their summer work schedule was especially grueling. They worked very long hours. Grape picking began in the morning, but grapes did not begin to arrive at the processing sheds until early afternoon. Processing sheds began work at 2:00 p.m. and continued until all of the grapes picked had been packed. On average, cleaners worked 9.6 hours per day and packers 10.3 hours, not counting time waiting for the sheds to open, or for coffee breaks and dinner. Work commonly finished well after midnight and, during the seasonal peak, as late as 6:00 a.m. Many females liked beginning work in the early afternoon because it gave them time to take care of family responsibilities in the morning.

> 16 In one case, a young woman responded that cleaning grapes in a packing shed allowed her to achieve self-esteem ( _me siento realizada_ ) and satisfy tangible needs.  She had previously felt isolated in her rural home, lacking social contact and unable to contribute to her family’s needs. Work in the packing shed allowed her to interact with her co-workers. She enjoyed them.  She benefited from sharing problems with them, discovering that they struggled with similar issues, and talking to them about how to deal with these problems.  She was proud that she performed her job task well and was pleased to contribute to her family’s income and well being.

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Women mentioned the problems that they faced in meeting these dual responsibilities. Some women indicated that their husbands did not want them to work and a few said they had obtained agreement to work only during peak season when earnings were high. However, more women indicated that their husbands appreciated their income, recognized that it improved family welfare, and supported their working. A few women said that their husbands had accepted some household tasks to help.

All of the women interviewed worked at a task that was paid on a piece rate basis most of the time. Despite the increased pressure and expenditure of effort that piece rate work required, when asked their preference for summer work, 58% of workers expressed a preference for piece rate pay when working in a packing shed during the summer. The overwhelming reason for preferring piece rate pay was that it allowed the worker to earn more. Nonetheless, a significant proportion of these workers would have preferred a salaried job during the summer and most did not want piece rate employment on a yearround basis. Indeed, 61% of workers preferred a fixed wage if they could get a yeararound job. Roughly half said they did not want to work at the intense pace required by piece rate work on a continuing basis.<sup>17</sup> Others commented that they felt that they would earn more if working for a wage, including some who said that they would earn a higher rate for overtime, while others said their earnings would be more stable.

The workers interviewed understood the advantages and disadvantages of their various employment options. Their decision to accept piece rate work depended partly on a lack of other remunerative employment during the rest of the year. Their relative

> 17 Most workers (52%) believed that they increased their effort and their productivity when working on a piece rate basis. Only 6% believed that their productivity decreased.  Eighty-three percent of workers indicated that they felt competition with their co-workers in terms of trying to process a higher share of the “common” raw material.

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poverty contributed to their desire to work hard when an employment opportunity presented itself. One might expect the supply of labor for temporary agricultural work on a piece rate basis will decrease if and when other employment opportunities materialize.

# **9. Household Income Distribution Effects of Female Work**

Many women entered the labor force to supplement the income of other family members and/or to satisfy their own special needs.<sup>18</sup> However, a significant number of women were the major income earner in their household. Approximately 180 women lived in households that contained no male workers. Another 25% of women were the primary earner in their households even though their households included an adult male who worked at least part of the time.

We lacked data to test whether women’s acceptance of temporary work in the fruit sector had improved household income. We only observed the households in which female workers resided, not the households they resided in prior to obtaining employment, and we had no information on rural families that did not have any members working in the fruit sector. It is nonetheless instructive to see how the income earned by women in our sample affected their current households.

We analyzed the income distribution effects using a Gini coefficient that is decomposed using the approach developed by Stark, et al. The Gini coefficient can be written as: G0 = ΣRkGkYk, where G0 is the Gini for total income and Gk the Gini for

> 18 Although we did not collect data on how women used their earnings, informal discussion with workers suggested that, in addition to providing a general income supplement, most women emphasized expenditures on the practical needs of their children and on acquiring durable household goods that improved their own productivity and welfare.  Nearly all households already had TVs, and most women asked indicated that they had already bought or hoped to buy (with their earnings) a gas range, a refrigerator, and a semi-automatic clothes washer.

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income from source k. Yk is income from source k and Rk is a measure of the variation between income from source k and total income.

Workers in our sample reported three sources of household income during 1991: own income, income earned by other household members and income received from other sources, e.g., a farm plot, a business, a pension, or a government transfer payment such as a family allowance. Because our interest is in the effect of female employment in the fruit sector, we aggregated the income of each household into slightly different categories: 1) household income earned by males (regardless of source of earned income) and by females from work outside the fruit sector 2) income earned by females from fruit sector work, and 3) other income (Table 7).

The shares of these income sources in total household incomes are 0.66, 0.26, and 0.08, respectively. Females working as temporary laborers in the fruit sector accounted for approximately one-quarter of their households' incomes. Males and females working outside the fruit sector accounted for approximately two-thirds of household incomes. Other sources contribute only a small fraction of income. Practically all of the "other" income was received in the form of pensions and family allowances.

The Gini coefficient for the household distribution of income in this sample was 0.313. Not unexpectedly, the distribution of income among these households was relatively equal since most workers came from a similar economic background. For comparison, the Gini coefficient for income only from male workers and female nonagricultural workers was .418. The Gini coefficient for women working in the agricultural sector is .453, somewhat higher. The Gini for "other" income is .416.

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The calculated R1 (.85) indicates that income from source 1 is highly correlated with total household income. Similarly, income from source 3 is also highly correlated (R3 = .84) with total household income. This suggests that families with higher earned income also tended to have higher amounts of "other" income. However, income from source 2 was much less correlated with total household income; R2 = .43. Further, in examining the marginal effect of a small percentage change in the income of each income factor on the Gini, we found that a 1 percent increase in income from sources 1 and 3 would increase income inequality, while a 1 percent increase in income from source 2 would reduce household income inequality.

The results suggest that the income earned by female agricultural workers significantly decreased total income inequality among these households. Although women might have worked elsewhere if the fruit sector had not developed, the dearth of non-agricultural work by workers in the sample and the historical lack of agricultural work for rural women suggest that fruit sector work contributed to an improvement in the income distribution of these families.

# **10. Conclusions**

Modern fruit sector development in Chile sharply increased the demand for agricultural labor, particularly during spring and summer. Women, who traditionally had not worked in agriculture on a salaried basis, found employment opportunities in the fruit sector, particularly as temporary laborers in the packing sheds. Using data from a sample of male and female workers employed in table grape packing sheds and including results from other studies, we have analyzed key characteristics of fruit sector employment to understand how it affected female workers and their families. The evidence shows that

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the fruit sector offered women opportunities for employment, income and personal fulfillment that were previously lacking.

Tasks in the fruit sector were generally gender specialized due to supply and demand factors. Fruit sector labor demand was highly seasonal. Wages for temporary agricultural work varied greatly seasonally. Labor force participation declined as wages fell, but women responded much more than men to changes in the expected wage. Women nonetheless experienced a much higher unemployment rate than men did. Household role (e.g., single mother, married woman with children, single man, and married man) had a significant effect on labor force participation. We conjecture that household role also affected search effort and the probability of employment.

Women in this sample earned significantly more in agricultural than nonagricultural work and more when working at a piece rate than for a wage. Although piece work paid more, it involved greater effort and many women indicated that they would not want to work at a piece rate throughout the year. Women earned higher average salaries than men did, but primarily because women worked more at a piece rate and mainly during the peak season, when wages were highest. Women’s daily earnings exceeded men’s earnings during the peak season, but the opposite was true during the slack season. Adjusting for season, incentive system factors, sector of work and standard human capital characteristics, women seemed to face significant wage discrimination. Overall, there was greater variance in women's (as compared to men's) wages, employment, and unemployment, implying that women faced greater uncertainty in the labor market.

All of the women interviewed were temporary agricultural workers. Some preferred to work only a few months, but most wanted employment throughout most or

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all of the year. Indeed, most expressed a willingness to work for lower pay if they could obtain year-round employment. Part of their desire for year-round work was due to difficulties in consumption smoothing throughout the year.

Women were well informed about many aspects of the packing shed jobs that they accepted and their willingness to accept work in a specific shed at a specific piece rate was strongly influenced by these aspects. Female workers thus demonstrated that they possessed substantial economic sophistication in selecting among alternative employment opportunities and in negotiating for appropriate remuneration.

Work allowed many women to significantly improve their household’s standard of living and achieve greater independence and voice within their households, including more decision making power in purchases. Women's earnings from agricultural work contributed importantly, about 25%, to household income in this study. Women tended to work very long hours during the summer and most maintained significant responsibility for household tasks. The balance between household work and employment was challenging for women, but they consistently indicated that work was a source of satisfaction, social networking and self-esteem, in addition to their financial contributions and, for some, their financial independence. Nonetheless, most women and their families remained relatively poor by Chilean standards. Some women reported that their husbands provided some household help, but others indicated that their husbands objected to or constrained their work. Since income from female fruit sector employment was not strongly correlated with income from other sources, such income decreased household income inequality within the households studied.

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