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Earnings, Rents, and Competition in the Airline Labor Market

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  • Hirsch, Barry T
  • Macpherson, David A

Abstract

Transformation of the airline labor market continues long after deregulation. Airline wages changed little immediately following deregulation, implying either the absence of regulatory rents or maintenance of product market power and union strength. Analysis for 1973-97, however, indicates that prior to recent gains, the relative earnings of air transport workers decreased markedly during the latter half of the 1980s and early 1990s. Some of the earnings advantage of airline workers represents returns to occupational skills and worker-specific quality. Labor rents are attributable largely to union bargaining power, which in turn is constrained by the financial health of carriers. Copyright 2000 by University of Chicago Press.

Suggested Citation

  • 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.
  • Handle: RePEc:ucp:jlabec:v:18:y:2000:i:1:p:125-55
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    References listed on IDEAS

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    Cited by:

    1. John D. Bitzan & James H. Peoples & Wesley W. Wilson, 2016. "Introduction and Overview," Advances in Airline Economics,in: Airline Efficiency, volume 5, pages 1-10 Emerald Publishing Ltd.
    2. Greer, Mark, 2009. "Is it the labor unions' fault? Dissecting the causes of the impaired technical efficiencies of the legacy carriers in the United States," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 779-789, November.
    3. Damien J. Neven & Lars-Hendrik Röller & Zhentang Zhang, 1997. "Union Power and Product Market Competition: Evidence from the Airline Industry," CIG Working Papers FS IV 97-38, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    4. 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.
    5. Maria Guadalupe, 2007. "Product Market Competition, Returns to Skill, and Wage Inequality," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 439-474.
    6. Darin Lee & Nicholas G. Rupp, 2007. "Retracting a Gift: How Does Employee Effort Respond to Wage Reductions?," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 725-761.
    7. Natália Pimenta Monteiro, 2004. "Regulatory reform and the Portuguese banking labour market: two decades later," NIPE Working Papers 10/2004, NIPE - Universidade do Minho.
    8. 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.
    9. Brown Johnson, Nancy & Anderson, Jonathan R, 2004. "5. Airline Employment, Productivity, And Working Conditions Following Deregulation," Research in Transportation Economics, Elsevier, vol. 10(1), pages 79-108, January.
    10. Severin Borenstein & Nancy L. Rose, 2014. "How Airline Markets Work…or Do They? Regulatory Reform in the Airline Industry," NBER Chapters,in: Economic Regulation and Its Reform: What Have We Learned?, pages 63-135 National Bureau of Economic Research, Inc.
    11. Barry T. Hirsch & Edward J. Schumacher, 2004. "Match Bias in Wage Gap Estimates Due to Earnings Imputation," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 689-722, July.
    12. Barry T. Hirsch, 2012. "Unions, dynamism, and economic performance," Chapters,in: Research Handbook on the Economics of Labor and Employment Law, chapter 4, pages 107-145 Edward Elgar Publishing.
    13. Melo Filho, Cícero R. & Salgado, Lucia Helena & Sato, Renato Cesar & Oliveira, Alessandro V.M., 2014. "Modeling the effects of wage premiums on airline competition under asymmetric economies of density: A case study from Brazil," Journal of Air Transport Management, Elsevier, vol. 36(C), pages 59-68.
    14. Natália Monteiro, 2009. "Regulatory reform and labour earnings in Portuguese banking," Empirical Economics, Springer, vol. 36(3), pages 557-574, June.
    15. Addison, John T., 2006. "Politico-Economic Causes of Labor Regulation in the United States: Rent Seeking, Alliances, Raising Rivals' Costs (Even Lowering One's Own?), and Interjurisdictional Competition," IZA Discussion Papers 2381, Institute for the Study of Labor (IZA).
    16. Edward J. Schumacher & Ben S. Shippen, 1999. "Wages and Exit Decisions for Workers in Declining Industries: the Case of Textile and Apparel," Working Papers 9909, East Carolina University, Department of Economics.
    17. 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.
    18. Severin Borenstein & Nancy L. Rose, 2007. "How Airline Markets Work...Or Do They? Regulatory Reform in the Airline Industry," NBER Working Papers 13452, National Bureau of Economic Research, Inc.
    19. Barry T. Hirsch, 2008. "Sluggish Institutions in a Dynamic World: Can Unions and Industrial Competition Coexist?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 153-176, Winter.
    20. Barry T. Hirsch & Edward J. Schumacher, 2001. "Private Sector Union Density and the Wage Premium: Past, Present, and Future ," Journal of Labor Research, Transaction Publishers, vol. 22(3), pages 487-518, July.
    21. Bruce E. Kaufman, 2013. "Keeping the Commitment Model in the Air during Turbulent Times: Employee Involvement at Delta Air Lines," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52, pages 343-377, January.
    22. Bitzan, John & Peoples, James, 2016. "A comparative analysis of cost change for low-cost, full-service, and other carriers in the US airline industry," Research in Transportation Economics, Elsevier, vol. 56(C), pages 25-41.
    23. Barry T. Hirsch & Edward J. Schumacher, 2000. "“Earnings Imputation and Bias in Wage Gap Estimates,”," Working Papers 0003, East Carolina University, Department of Economics.
    24. 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 for the Study of Labor (IZA).
    25. repec:taf:applec:45:y:2013:i:18:p:2547-2562 is not listed on IDEAS

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