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7. Shifting Gears In The Corner Office: Deregulation And The Earnings Of Trucking Executives

Author Info

Listed author(s):
  • Burks, Stephen V
  • Guy, Frederick
  • Maxwell, Benjamin

Abstract

We study the earnings of executives of for-hire trucking companies from 1977 to 1986. Following deregulation of the U.S. trucking industry in 1979-1980, the real earnings of trucking firm executives (corporate officers) fell for a year or two, but then stabilized and, in the mid-1980s, recovered. Profit rates also fell immediately after deregulation, and then leveled off. The earnings of employee drivers, on the other hand, went into steady decline from 1979 to past the end of the period studied here. To analyze these trends we use a version of the Motor Carrier Financial and Operating Statistics, collected by the Interstate Commerce Commission on all medium-sized and large trucking firms for the years 1977-1986. Our version is unique in breaking out annual employee earnings by employee category for this time period. We document the change in the relative earnings of drivers and executives within the same trucking firms over time. We test the predictions of principal-agent theory and the political constraint model concerning the effect of deregulation on the level and performance sensitivity of executive pay, and find evidence favoring political constraint over principal-agent. We also explore the effects of union presence and union busting on the pay of executives, and find that officers in unionized firms get paid more on average, but that officers' pay increases when a unionized firm goes non-union.

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Article provided by Elsevier in its journal Research in Transportation Economics.

Volume (Year): 10 (2004)
Issue (Month): 1 (January)
Pages: 137-164

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Handle: RePEc:eee:retrec:v:10:y:2004:i:1:p:137-164
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  1. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 255-283.
  2. 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 1146-1178, December.
  3. Baker, George P & Jensen, Michael C & Murphy, Kevin J, 1988. " Compensation and Incentives: Practice vs. Theory," Journal of Finance, American Finance Association, vol. 43(3), pages 593-616, July.
  4. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
  5. Geddes, R Richard, 1997. "Ownership, Regulation, and Managerial Monitoring in the Electric Utility Industry," Journal of Law and Economics, University of Chicago Press, vol. 40(1), pages 261-288, April.
  6. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
  7. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
  8. Moore, Thomas Gale, 1978. "The Beneficiaries of Trucking Regulation," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 327-343, October.
  9. Frederick Guy, 2000. "CEO Pay, Shareholder Returns, and Accounting Profits," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 7(3), pages 263-274.
  10. Fred Guy, 2000. "CEO Pay, Shareholder Returns and Accounting Profitability," Working Papers wp155, Centre for Business Research, University of Cambridge.
  11. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
  12. Hubbard, R. Glenn & Palia, Darius, 1995. "Executive pay and performance Evidence from the U.S. banking industry," Journal of Financial Economics, Elsevier, vol. 39(1), pages 105-130, September.
  13. Monaco, Kristen A. & Brooks, Taggert J., 2001. "Deregulation and wages in trucking: A time series phenomenon -- A time series approach," Research in Transportation Economics, Elsevier, vol. 6(1), pages 55-69, January.
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Cited by:

  1. Burks, Stephen V. & Monaco, Kristen & Myers-Kuykindall, Josephine, . "Industry Issue Paper: Trends in the Use of Large Trucks by Truckload and Less-Than-Truckload Motor Carriers in the 1990s," Journal of the Transportation Research Forum, Transportation Research Forum.
  2. 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.

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