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Deregulation and Labor Earnings in the Airline Industry

  • David Card

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.

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File URL: http://arks.princeton.edu/ark:/88435/dsp01sb397825h
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Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 627.

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Date of creation: Jan 1989
Date of revision:
Handle: RePEc:pri:indrel:dsp01sb397825h
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  1. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-77, October.
  2. Helwege, Jean, 1992. "Sectoral Shifts and Interindustry Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 10(1), pages 55-84, January.
  3. David Card, 1986. "The impact of deregulation on the employment and wages of airline mechanics," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(4), pages 527-538, July.
  4. Daniel Parent, 1995. "Industry-Specific Capital and the Wage Profile: Evidence from the NLSY and the PSID," CIRANO Working Papers 95s-26, CIRANO.
  5. Francine D. Blau & Lawrence M. Kahn, 1992. "The Gender Earnings Gap: Some International Evidence," NBER Working Papers 4224, National Bureau of Economic Research, Inc.
  6. Arthur S. De Vany, 1975. "The Effect of Price and Entry Regulation on Airline Output, Capacity and Efficiency," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 327-345, Spring.
  7. 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.
  8. 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 1333-81, September.
  9. Nancy L. Rose, 1985. "The Incidence of Regulatory Rents in the Motor Carrier Industry," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 299-318, Autumn.
  10. David J. Walsh, 1988. "Accounting for the proliferation of two-tier wage settlements in the U.S. airline industry, 1983├╗1986," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 42(1), pages 50-62, October.
  11. 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.
  12. Moore, Thomas Gale, 1978. "The Beneficiaries of Trucking Regulation," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 327-43, October.
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