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Deregulation and Labor Earnings in the Airline Industry

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  • David Card

Abstract

This paper uses a variety of data sources to study the effect of deregulation on the structure of wages in the airline industry. Microdata from the 1980 and 1990 Censuses show a 10 percent decline in the relative earnings of airline workers after deregulation, with roughly similar declines for industry-specific occupations (pilots and flight attendants) and general occupations (managers and secretaries). Union contract data for pilots, flight attendants and mechanics at the major firms show similar trends in the levels of earnings along with a rise in inter-firm wage inequality -- especially for pilots. Finally, data from the displaced worker surveys reveal that airline workers experienced similar wage losses to job-losers from other industries over the 1980s. Taken as a whole, the evidence suggests that the rent premiums earned by airline workers in the regulatory era were relatively modest, and comparable to the wage premiums earned in many other sectors.

Suggested Citation

  • David Card, 1996. "Deregulation and Labor Earnings in the Airline Industry," NBER Working Papers 5687, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5687
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    References listed on IDEAS

    as
    1. Daniel Parent, 1995. "Industry-Specific Capital and the Wage Profile: Evidence from the NLSY and the PSID," CIRANO Working Papers 95s-26, CIRANO.
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    6. Helwege, Jean, 1992. "Sectoral Shifts and Interindustry Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 10(1), pages 55-84, January.
    7. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-1381, September.
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    11. David Card, 1986. "The Impact of Deregulation on the Employment and Wages of Airline Mechanics," ILR Review, Cornell University, ILR School, vol. 39(4), pages 527-538, July.
    12. Wallace Hendricks, 1975. "The Effect of Regulation on Collective Bargaining in Electric Utilities," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 451-465, Autumn.
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    Citations

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    Cited by:

    1. Dag Morten Dalen & Nils-Henrik M von der Fehr & Espen R Moen, 2003. "Regulation with wage bargaining," Economic Journal, Royal Economic Society, vol. 113(487), pages 525-538, April.
    2. 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.
    3. Alexey Levkov, 2010. "Branching of banks and union decline," Risk and Policy Analysis Unit Working Paper QAU10-7, Federal Reserve Bank of Boston.
    4. Dhillon, Amrita & Petrakis, Emmanuel, 1995. "On Centralized Bargaining in a Symmetric Oligopolistic Industry," The Warwick Economics Research Paper Series (TWERPS) 444, University of Warwick, Department of Economics.
    5. Robert J. Gordon, 1992. "Productivity in the Transportation Sector," NBER Chapters,in: Output Measurement in the Service Sectors, pages 371-427 National Bureau of Economic Research, Inc.
    6. Nicole M. Fortin & Thomas Lemieux, 1997. "Institutional Changes and Rising Wage Inequality: Is There a Linkage?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 75-96, Spring.
    7. Jennifer K. Shanefelter, 2008. "Restructuring, Ownership and Efficiency: The Case of Labor in Electricity Generation," EAG Discussions Papers 200812, Department of Justice, Antitrust Division.
    8. 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.
    9. Hirsch, Barry, 2006. "Wage Determination in the U.S. Airline Industry: Union Power under Product Market Constraints," IZA Discussion Papers 2384, Institute for the Study of Labor (IZA).
    10. Erica Groshen & David Levine, 1998. "The rise and decline(?) of U.S. internal labor markets," Research Paper 9819, Federal Reserve Bank of New York.
    11. repec:wsi:serxxx:v:59:y:2014:i:04:n:s0217590814500295 is not listed on IDEAS
    12. Abigail K. Wozniak, 2007. "Product Markets and Paychecks: Deregulation's Effect on the Compensation Structure in Banking," ILR Review, Cornell University, ILR School, vol. 60(2), pages 246-267, January.
    13. Sonja Jovicic & Ronald Schettkat, 2013. "Does Inequality Promote Employment? An International Comparison," Schumpeter Discussion Papers SDP13009, Universitätsbibliothek Wuppertal, University Library.
    14. Tinh Doan & Tran Quang Tuyen & Hien Nguyen, 2018. "Local Competitiveness and Labour Market Returns in a Transition Economy: Evidence from Vietnam," Working Papers in Economics 18/06, University of Waikato.
    15. Disney, Richard F & Gosling, Amanda, 2003. "A New Method for Estimating Public Sector Pay Premia: Evidence from Britain in the 1990's," CEPR Discussion Papers 3787, C.E.P.R. Discussion Papers.
    16. Schettkat, Ronald, 2003. "Koordination von Lohnverhandlungen (Coordination of wage bargaining)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 36(4), pages 634-648.
    17. Dalen, D.M. & von der Fehr, N.-H.M. & Moen, E.R., 1998. "Regulation and Wage Bargaining," Memorandum 13/1998, Oslo University, Department of Economics.
    18. Hübler, Olaf & Meyer, Wolfgang, 2000. "Industrial Relations and the Wage Differentials between Skilled and Unskilled Blue-Collar Workers within Establishments: An Empirical Analysis with Data of Manufacturing Firms," IZA Discussion Papers 176, Institute for the Study of Labor (IZA).
    19. repec:iab:iabmit:v:36:i:4:p:634-648 is not listed on IDEAS

    More about this item

    JEL classification:

    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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