Migration patterns in Israeli agriculture have gone through different phases. Labor flowed into farming until the country became self‐sufficient in terms of food supply. Then, self‐employed farmers exited gradually while production continued to increase, destined for export markets. This process intensified considerably when foreign labor was allowed to enter the country. Traditional production theory predicts that migrant workers will drive local workers to lose their jobs, but the Israeli data show that the number of Israeli hired farm workers has actually increased since the arrival of foreign labor. This paper develops a modified theoretical model in which farm labor is heterogeneous, so that changes in the number of foreign and local hired workers are not necessarily opposite in sign. The results of the model are consistent with the observation that the availability of foreign labor has led to an increase in the production and export of labor‐intensive horticultural products. Farms have become larger and more specialized, and this has led to labor specialization, with foreign workers performing the manual tasks and Israeli hired employees performing the managerial and professional ones. We conclude that the inflow of foreign workers has led to an irreversible structural change in Israeli agriculture. Surrendering to the popular demand to reduce the number of foreign workers for the benefit of local workers will actually lessen the demand for local farm workers.