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Wages in Rail Markets: Deregulation, Mergers, and Changing Network Characteristics

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  • Davis, David E.
  • Wilson, Wesley W.

Abstract

The Stagger’s Act of 1980 largely deregulated the Class I Railroad industry and has had profound effects on labor. Between 1978 and 1994, employment in the industry decreased by about 60 percent, while real wages (average compensation) increased by over 40 percent. Earlier research examined employment effects; in this paper, we develop and estimate compensation effects using firm level data. By using firm level data, we are able to identify the effects of partial deregulation, an accompanying and massive consolidation movement as well as changes in firm operating and network characteristics. Our estimates suggest that mergers contributed 5 to 15 percent; partial deregulation contributed about 20 percent; and changes in firm operating and network characteristics contributed 4 to 5 percent to the overall increase in wages.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7663.

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Date of creation: Apr 2005
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Publication status: Published in Southern Economic Journal 4.69(2005): pp. 865-885
Handle: RePEc:pra:mprapa:7663

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Keywords: Wages; mergers; railroads; deregulation;

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References

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  1. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  2. Clifford Winston, 1998. "U.S. Industry Adjustment to Economic Deregulation," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 89-110, Summer.
  3. Wilson, Wesley W, 1997. "Cost Savings and Productivity in the Railroad Industry," Journal of Regulatory Economics, Springer, vol. 11(1), pages 21-40, January.
  4. Rose, Nancy L, 1987. "Labor Rent Sharing and Regulation: Evidence from the Trucking Industry," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1146-78, December.
  5. Talley, Wayne K, 2001. "Wage Differentials of Transportation Industries: Deregulation versus Regulation," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 406-29, July.
  6. Wallace Hendricks, 1977. "Regulation and Labor Earnings," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 483-496, Autumn.
  7. Martinello, Felice, 1989. "Wage and Employment Determination in a Unionized Industry: The IWA and the British Columbia Wood Products Industry," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 303-30, July.
  8. Wilson, Wesley W, 1994. "Market-Specific Effects of Rail Deregulation," Journal of Industrial Economics, Wiley Blackwell, vol. 42(1), pages 1-22, March.
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Cited by:
  1. Shaik, Saleem & Allen, Albert J. & Myles, Albert E. & Yeboah, Osei-Agyeman, 2008. "Importance of Financial Variables on Efficiency of Class I Railroads in the United States," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6874, Southern Agricultural Economics Association.
  2. Lea, Stephen E.G. & Webley, Paul, 2005. "In search of the economic self," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 34(5), pages 585-604, October.
  3. Siew Hoon Lim & C.A. Knox Lovell, 2009. "Profit and productivity of US Class I railroads," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(7), pages 423-442.

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