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The Impact of Deregulation on the Employment and Wages of Airline Mechanics

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  • David Card

Abstract

This paper describes the effects of deregulation on negotiated wage rates and employment levels of aircraft mechanics in the scheduled airline industry between 1978 and 1984. A firm-by-firm analysis of the established trunk airlines shows relatively small changes in real wage rates since 1978, and only recent changes in interfirm wage differentials. Employment growth rates, however, have varied widely, both among the established trunk airlines and between them and the new-entrant and former local service airlines. The data suggest that deregulation shifted 5,000 to 7,000 maintenance jobs from the established trunks to the smaller airlines. The shift may have reduced average hourly earnings of mechanics in the industry by as much as 5 percent below the level they would have reached in the absence of deregulation.

Suggested Citation

  • David Card, 1986. "The Impact of Deregulation on the Employment and Wages of Airline Mechanics," ILR Review, Cornell University, ILR School, vol. 39(4), pages 527-538, July.
    • Handle: RePEc:sae:ilrrev:v:39:y:1986:i:4:p:527-538
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    Cited by:

    1. Maria Guadalupe, 2007. "Product Market Competition, Returns to Skill, and Wage Inequality," Journal of Labor Economics, University of Chicago Press, vol. 25(3), pages 439-474.
    2. Bassanini, Andrea, 2015. "A Bitter Medicine? Short-term Employment Impact of Deregulation in Network Industries," IZA Discussion Papers 9187, Institute of Labor Economics (IZA).
    3. Saint-Paul, Gilles, 2021. "Pareto-improving structural reforms," Journal of Economic Theory, Elsevier, vol. 194(C).
    4. Bitzan, John D., 1997. "The Impacts of Deregulation on Railroad Labor," MPC Reports 231800, North Dakota State University, Upper Great Plains Transportation Institute.
    5. Lergetporer, Philipp & Ruhose, Jens & Simon, Lisa, 2018. "Entry Barriers and the Labor Market Outcomes of Incumbent Workers: Evidence from a Deregulation Reform in the German Crafts Sector," IZA Discussion Papers 11857, Institute of Labor Economics (IZA).
    6. Fernandes, Ana P. & Ferreira, Priscila & Alan Winters, L., 2014. "Firm entry deregulation, competition and returns to education and skill," European Economic Review, Elsevier, vol. 70(C), pages 210-230.
    7. David E. Davis & Wesley W. Wilson, 2003. "Wages in Rail Markets: Deregulation, Mergers, and Changing Networks Characteristics," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 865-885, April.
    8. Kristen Monaco, 2001. "Examining Industry Effects for Truck Drivers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(1), pages 91-103, February.
    9. Sumit K. Majumdar & Rabih Moussawi & Ulku Yaylacicegi, 2019. "Mergers and Wages in Digital Networks: a Public Interest Perspective," Journal of Industry, Competition and Trade, Springer, vol. 19(4), pages 583-615, December.
    10. David Card, 1989. "Deregulation and Labor Earnings in the Airline Industry," Working Papers 627, Princeton University, Department of Economics, Industrial Relations Section..
    11. Good, D. & Nadiri, M.I. & Sickles, R., 1996. "Index Number and Factor Demand Approaches to the Estimarion of Productivity," Working Papers 96-34, C.V. Starr Center for Applied Economics, New York University.
    12. Lisa Simon, 2019. "Microeconometric Analyses on Determinants of Individual Labour Market Outcomes," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 83.
    13. Dube Arindrajit & Reddy Sanjay G., 2014. "Threat Effects and Trade: Wage Discipline through Product Market Competition," Journal of Globalization and Development, De Gruyter, vol. 4(2), pages 213-252, March.
    14. Majumdar, Sumit K., 2015. "Competitor entry impact on jobs and wages in incumbent firms: retrospective evidence from a natural experiment," Business and Politics, Cambridge University Press, vol. 17(2), pages 291-326, August.
    15. Alexey Levkov, 2010. "Branching of banks and union decline," Supervisory Research and Analysis Working Papers QAU10-7, Federal Reserve Bank of Boston.
    16. James Peoples, 1998. "Deregulation and the Labor Market," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 111-130, Summer.
    17. Jennifer K. Shanefelter, 2008. "Restructuring, Ownership and Efficiency: The Case of Labor in Electricity Generation," EAG Discussions Papers 200812, Department of Justice, Antitrust Division.
    18. James Peoples, Jr., 1990. "Airline Deregulation and Industry Wage Levels," Eastern Economic Journal, Eastern Economic Association, vol. 16(1), pages 49-58, Jan-Mar.
    19. repec:ags:ndtimr:231736 is not listed on IDEAS
    20. Natália Pimenta Monteiro, 2004. "Regulatory reform and the Portuguese banking labour market: two decades later," NIPE Working Papers 10/2004, NIPE - Universidade do Minho.
    21. Henrik B. Okholm & Anna Möller, 2012. "Liberalization and Postal Workers," Chapters, in: Michael A. Crew & Paul R. Kleindorfer (ed.), Multi-Modal Competition and the Future of Mail, chapter 18, Edward Elgar Publishing.
    22. Jeff Borland, 2000. "Economic Explanations of Earnings Distribution Trends in the International Literature and Application to New Zealand," Treasury Working Paper Series 00/16, New Zealand Treasury.
    23. Hirsch, Barry T & Macpherson, David A, 2000. "Earnings, Rents, and Competition in the Airline Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 125-155, January.

    More about this item

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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