Regulation,Deregulation,and Collective Bargaining in Airlines

Abstract

To test the hypothesis that government regulation of an industry's product market increases union power in that industry, this study first compares earnings and the “scores” of union contracts in airlines and manufacturing, and then compares negotiated wage rates and union contract scores in the more regulated and the less regulated segments of air transportation. The results, while not definitive because of data limitations, consistently support the hypothesis for the period prior to the recent deregulation of airlines. The authors nevertheless predict that deregulation will have little effect on union power in this industry, arguing that the industry and union characteristics that have developed over the forty years of regulation have created a bargaining environment that will not change significantly in the near future.