IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v45y2013i18p2547-2562.html
   My bibliography  Save this article

Labour inputs substitution during corporate restructuring: a translog model approach for US freight railroads

Author

Listed:
  • Laura Padilla Angulo

Abstract

After deregulation in 1980, competitive pressures forced the large US freight railroads to reduce costs and restructure, resulting in an economic renaissance of the US railroad companies after years of poor financial conditions. The most striking restructuring measure receiving much attention was dramatic labour downsizing: until 2004 employment was reduced by 60%. But other overlooked measures are the significant restructuring of workforce composition, and important changes in railroads' workplace organization practices and corporate culture. To better understand this successful occupational restructuring, I investigate labour inputs substitutional relationships by using a translog variable cost model. Labour is decomposed into six employee categories rather than traditional production--nonproduction breakdown to estimate inputs elasticities of substitution. The data investigated is a unique firm-level dataset on the US freight Class I Railroads, covering a 22-year period, which allows this fine-grained analysis. I also document railroad workplace organization practices relating to results and reflecting changes in railroads corporate culture. I find strong substitutability between managerial positions and transportation employees, pointing to achievement of better command and control of operations; a high degree of complementarity between the most skilled employee categories and the strongest substitute relationship between transportation and maintenance of Ways&Structures groups.

Suggested Citation

  • Laura Padilla Angulo, 2013. "Labour inputs substitution during corporate restructuring: a translog model approach for US freight railroads," Applied Economics, Taylor & Francis Journals, vol. 45(18), pages 2547-2562, June.
  • Handle: RePEc:taf:applec:v:45:y:2013:i:18:p:2547-2562
    DOI: 10.1080/00036846.2012.669465
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2012.669465
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/00036846.2012.669465?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Daughety, Andrew F & Nelson, Forrest D, 1988. "An Econometric Analysis of Changes in the Cost and Production Structure of the Trucking Industry, 1953-1982," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 67-75, February.
    2. Ernst Berndt & Ann Friedlaender & Judy Chiang & Christopher Vellturo, 1993. "Cost effects of mergers and deregulation in the U.S. Rail industry," Journal of Productivity Analysis, Springer, vol. 4(1), pages 127-144, June.
    3. Ivaldi, M & McCullough, G J, 2001. "Density and Integration Effects on Class I U.S. Freight Railroads," Journal of Regulatory Economics, Springer, vol. 19(2), pages 161-182, March.
    4. Hamermesh, Daniel S., 1987. "The demand for labor in the long run," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 8, pages 429-471, Elsevier.
    5. repec:ags:ndtimr:231736 is not listed on IDEAS
    6. Blackorby, Charles & Russell, R Robert, 1989. "Will the Real Elasticity of Substitution Please Stand Up? (A Comparison of the Allen/Uzawa and Morishima Elasticities)," American Economic Review, American Economic Association, vol. 79(4), pages 882-888, September.
    7. 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.
    8. Guido Friebel & Gerard McCullough & Laura Padilla Angulo, 2014. "Patterns of Restructuring The US Class 1 Railroads from 1984 to 2004," Journal of Transport Economics and Policy, University of Bath, vol. 48(1), pages 115-135, January.
    9. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, October.
    10. McFarland, Henry, 1989. "The Effects of United States Railroad Deregulation on Shippers, Labor, and Capital," Journal of Regulatory Economics, Springer, vol. 1(3), pages 259-270, September.
    11. Bitzan, John D., 1997. "The Impacts of Deregulation on Railroad Labor," MPC Reports 231800, North Dakota State University, Upper Great Plains Transportation Institute.
    12. James M. MacDonald & Linda C. Cavalluzzo, 1996. "Railroad Deregulation: Pricing Reforms, Shipper Responses, and the Effects on Labor," ILR Review, Cornell University, ILR School, vol. 50(1), pages 80-91, October.
    13. Turnovsky, Michelle H L & Donnelly, William A, 1984. "Energy Substitution, Separability, and Technical Progress in the Australian Iron and Steel Industry," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(1), pages 54-63, January.
    14. Freeman, Richard B & Medoff, James L, 1982. "Substitution between Production Labor and Other Inputs in Unionized and Nonunionized Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 220-233, May.
    15. Ann Schwarz-Miller & Wayne K. Talley, 2002. "Technology and Labor Relations: Railroads and Ports," Journal of Labor Research, Transaction Publishers, vol. 23(4), pages 513-533, October.
    16. Bitzan, John D., 2004. "8. Earnings Of Low To Mid-Level Managers In The Airline, Trucking, And Railroad Industries," Research in Transportation Economics, Elsevier, vol. 10(1), pages 165-189, January.
    17. Elisabetta Magnani & David Prentice, 2006. "Unionization and Input Flexibility in U.S. Manufacturing, 1973 – 1996," ILR Review, Cornell University, ILR School, vol. 59(3), pages 386-407, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tsakiridis, Andreas & Hanrahan, Kevin & Breen, James & Wallace, Michael & O’Donoghuea, Cathal, 2016. "Feed substitution and economies of scale in Irish beef production systems," 149th Seminar, October 27-28, 2016, Rennes, France 244769, European Association of Agricultural Economists.
    2. Laura Padilla-Angulo, 2020. "The impact of board diversity on strategic change: a stakeholder perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(4), pages 927-952, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:taf:applec:45:y:2013:i:18:p:2547-2562 is not listed on IDEAS
    2. Guido Friebel & Gerard McCullough & Laura Padilla, 2016. "Product Market Deregulation's Winners and Losers: US Railroads between 1981 and 2001," Working Papers 2016-005, Universidad Loyola Andalucía, Department of Economics.
    3. John Bitzan & Wesley Wilson, 2007. "Industry costs and consolidation: efficiency gains and mergers in the U.S. railroad industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(2), pages 81-105, March.
    4. Peoples, James & Talley, Wayne K., 2007. "Earnings Differentials of Railroad Managers and Labor," Research in Transportation Economics, Elsevier, vol. 20(1), pages 259-281, January.
    5. Rich, Daniel P., 2004. "6. Productivity, Technical Change And Labor Relations In Transportation Industries," Research in Transportation Economics, Elsevier, vol. 10(1), pages 109-135, January.
    6. 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.
    7. Al-Hadi, Azrina Abdullah & Bitzan, John & Peoples, James, 2019. "Input allocation efficiency in the United States railroad industry: Changing work rules and managerial flexibility," Transportation Research Part A: Policy and Practice, Elsevier, vol. 126(C), pages 281-296.
    8. Wesley W. Wilson & Frank A. Wolak, 2018. "Benchmark Regulation of Multiproduct Firms: An Application to the Rail Industry," NBER Working Papers 25268, National Bureau of Economic Research, Inc.
    9. Sang V Nguyen & Mary L Streitwieser, 1997. "Capital-Energy Substitution Revisted: New Evidence From Micro Data," Working Papers 97-4, Center for Economic Studies, U.S. Census Bureau.
    10. Wilson, Wesley W. & Wilson, William W., 2001. "Deregulation, rate incentives, and efficiency in the railroad market," Research in Transportation Economics, Elsevier, vol. 6(1), pages 1-24, January.
    11. Elisabetta Magnani & David Prentice, 2006. "Unionization and Input Flexibility in U.S. Manufacturing, 1973 – 1996," ILR Review, Cornell University, ILR School, vol. 59(3), pages 386-407, April.
    12. Koschel, Henrike, 2000. "Substitution elasticities between capital, labour, material, electricity and fossil fuels in German producing and service sectors," ZEW Discussion Papers 00-31, ZEW - Leibniz Centre for European Economic Research.
    13. Wilson, Wesley W. & Wilson, William W., 1998. "Deregulation And Innovation In Railroad Shipping Of Agricultural Commodities: 1972-1995," AE Series 23090, North Dakota State University, Department of Agribusiness and Applied Economics.
    14. Paul, Saumik, 2019. "A Decline in Labor's Share with Capital Accumulation and Complementary Factor Inputs: An Application of the Morishima Elasticity of Substitution," IZA Discussion Papers 12219, Institute of Labor Economics (IZA).
    15. Frondel, Manuel & Schmidt, Christoph M., 2003. "Rejecting capital-skill complementarity at all costs," Economics Letters, Elsevier, vol. 80(1), pages 15-21, July.
    16. Giulia BETTIN & Alessia LO TURCO & Daniela MAGGIONI, 2011. "A firm level perspective on migration," Working Papers 360, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    17. Fuller, Frank H., 1999. "Farm-Level Feed Demand In Turkey," 1999 Annual meeting, August 8-11, Nashville, TN 21534, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Ariu, Andrea & Müller, Tobias & Nguyen, Tuan, 2023. "Immigration and the Slope of the Labor Demand Curve: The Role of Firm Heterogeneity in a Model of Regional Labor Markets," CEPR Discussion Papers 18091, C.E.P.R. Discussion Papers.
    19. Koetse, Mark J. & de Groot, Henri L.F. & Florax, Raymond J.G.M., 2008. "Capital-energy substitution and shifts in factor demand: A meta-analysis," Energy Economics, Elsevier, vol. 30(5), pages 2236-2251, September.
    20. Dawei Zhang & Zhuo (June) Cheng & Hasan A. Qurban H. Mohammad & Barrie R. Nault, 2015. "Research Commentary—Information Technology Substitution Revisited," Information Systems Research, INFORMS, vol. 26(3), pages 480-495, September.
    21. Lundmark, Robert & Olsson, Anna, 2015. "Factor substitution and procurement competition for forest resources in Sweden," International Journal of Production Economics, Elsevier, vol. 169(C), pages 99-109.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:45:y:2013:i:18:p:2547-2562. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.