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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. Firm-specific data for the incumbent trunk airlines show relatively small changes in real wage rates since deregulation,and only recent increases in interfirm wage differentials. Employment growth rates, on the other hand, have varied widely among the incumbents, and between the incumbent trunks and the local service and new-entrant airlines. The data suggest that deregulation resulted in a transfer of 5000-7000 maintenance jobs from the incumbent trunks to the smaller airlines. This shift in employment reduced mechanics' earnings in the industry by as much as 5 percent.

Suggested Citation

  • David Card, 1986. "The Impact of Deregulation on the Employment and Wages of Airline Mechanics," NBER Working Papers 1847, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:1847 Note: LS
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    References listed on IDEAS

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    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
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    4. William M. Landes & Richard A. Posner, 1974. "The Private Enforcement of Law," NBER Working Papers 0062, National Bureau of Economic Research, Inc.
    5. Easterbrook, Frank H, 1985. "Detrebling Antitrust Damages," Journal of Law and Economics, University of Chicago Press, vol. 28(2), pages 445-467, May.
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    Cited by:

    1. Majumdar Sumit K., 2015. "Competitor entry impact on jobs and wages in incumbent firms: retrospective evidence from a natural experiment," Business and Politics, De Gruyter, vol. 17(2), pages 291-326, August.
    2. David E. Davis & Wesley W. Wilson, 2003. "Wages in Rail Markets: Deregulation, Mergers, and Changing Networks Characteristics," Southern Economic Journal, Southern Economic Association, vol. 69(4), pages 865-885, April.
    3. 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.
    4. Dapeng Zhang & Xiaokun Wang, 2016. "Investigating the Dynamic Spillover Effects of Low-Cost Airlines on Airport Airfare Through Spatio-Temporal Regression Models," Networks and Spatial Economics, Springer, vol. 16(3), pages 821-836, September.
    5. Bassanini, Andrea, 2015. "A Bitter Medicine? Short-term Employment Impact of Deregulation in Network Industries," IZA Discussion Papers 9187, Institute for the Study of Labor (IZA).
    6. James Peoples, 1998. "Deregulation and the Labor Market," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 111-130, Summer.
    7. Bitzan, John D., 1997. "The Impacts of Deregulation on Railroad Labor," MPC Report 231800, North Dakota State University, Upper Great Plains Transportation Institute.
    8. Jennifer K. Shanefelter, 2008. "Restructuring, Ownership and Efficiency: The Case of Labor in Electricity Generation," EAG Discussions Papers 200812, Department of Justice, Antitrust Division.
    9. 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.
    10. James Peoples, Jr., 1990. "Airline Deregulation and Industry Wage Levels," Eastern Economic Journal, Eastern Economic Association, vol. 16(1), pages 49-58, Jan-Mar.
    11. repec:ags:ndtimr:231736 is not listed on IDEAS
    12. David Card, 1989. "Deregulation and Labor Earnings in the Airline Industry," Working Papers 627, Princeton University, Department of Economics, Industrial Relations Section..
    13. Natália Pimenta Monteiro, 2004. "Regulatory reform and the Portuguese banking labour market: two decades later," NIPE Working Papers 10/2004, NIPE - Universidade do Minho.
    14. 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.
    15. Henrik B. Okholm & Anna Möller, 2012. "Liberalization and Postal Workers," Chapters,in: Multi-Modal Competition and the Future of Mail, chapter 18 Edward Elgar Publishing.
    16. 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.
    17. 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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