Foreign labor, peer‐networking and agricultural efficiency in the Italian dairy sector

While the presence of immigrants in the agricultural sector is widely acknowledged, the empirical evidence on its economic consequences is lacking, especially from a microeconomic perspective. Using the Farm Accountancy Data Network panel data for Italian dairy farms in the period 2008–2018, the present study investigates the relationship between foreign workforce and farm– technical efficiency, considering the workers' country of origin. We rely on different peer‐network theories, and using a stochastic frontier analysis accounting for the endogeneity of immigrant labor force. Results point to the general positive contribution of immigrants on Italian farms' efficiency, while unpaid family labor exerts a null‐to‐negative influence. We detected an important effect of peer‐working, namely complementary task specialization and conformity behavior, with diverse groups of workers associated to different efficiency levels. The evidence of the positive correlation between immigrants and the efficiency of the agricultural sector has significant implications for the design of immigration policies and the access to domestic agri‐food markets, especially for those sectors in higher labor demand, as well as speeding up the process of economic and social integration of the labor force. [EconLit citations: Q12, Q18, J61, C23, C26].