Careers in arm's-length contracting: evidence from the Chilean wine-grape market.

This article examines the role of implicit market-based career and promotion incentives within arm's-length contracts between wineries and independent wine-grape farmers in Chile. It hypothesizes that long-term contracts (LTCs) function as a form of promotion following a sequence of short-term contracts, motivating farmers to invest in quality-improving practices and human capital. Using survey data from 184 Chilean wine-grape farmers, the study finds that farmer ability—measured by experience, specialized agricultural education, and past training—and past performance indicators such as thinning grape clusters significantly increase the likelihood of accessing or transitioning to LTCs. The findings suggest that LTCs serve both as protection for winery investments and as incentives for farmers to improve grape quality, reflecting a career-like progression in agricultural contracting distinct from traditional contract motivations.