The Great Portuguese factor price equalization reset
Portugal may have 15 percent unemployment, but that does not mean that Reiter Affiliated Companies, an American fruit producer, can find local people to pick berries on its 76-hectare farm here.
Last year, the company, also known as RAC, began a nationwide recruitment campaign and hired 40 Portuguese. Half quit after the first day. By the end of the week, not a single one was left.
“They wanted a job, but this wasn’t what they were looking for, because it was basically too hard for too little money,” said Arnulfo Murillo, the farm’s production manager. “Farming here isn’t harder than in America, but the big difference is that being unemployed in the U.S. is a lot harder and in no way an attractive alternative.”
Instead, the farm has imported a third of its labor force all the way from Thailand — 160 of 450 employees — a more expensive alternative, but one that has filled its ranks.
Please note people, this is not (mainly) a post about immigration, which is only one possible channel for factor price equalization. The full story is here.