Previous studies of the effect of the 1978 Airline Deregulation Act on employee earnings have reported mixed results: some have found no negative long-run effect of deregulation and others have found a negative effect of up to 10%. Most of these studies relied on cross-sectional analysis of a few years' data. This paper, in contrast, examines the long-term trends in airline earnings, based on 34 years of newly collected firm-level data from the Department of Transportation's Form 41 and airline workers' unions. The author finds that although deregulation had no statistically significant effect on the earnings of mechanics, it strongly affected the earnings of flight attendants and pilots. Flight attendants' earnings were at least 12% lower by 1985 and 39% lower by 1992 than they would have been if deregulation had not occurred, and the corresponding shortfalls for pilots were 12% and 22%.
Get full access to this article
View all access options for this article.
References
1.
Air Line Pilots Association. 1994. “Air Line Pilots Association Reports, Financial Statements, and Additional Information, December 31, 1993 and 1992.”Air Line Pilot, Vol. 63, Special Edition (Fall), pp. 23–40.
2.
“Airline Wages Are Set for a Long Slide.”1984. Businessweek, April 9, pp. 127–28.
3.
AkerlofGeorge A.1982. “Labor Contracts as Partial Gift Exchange.”Quarterly Journal of Economics, Vol. 97, No. 4 (November), pp. 543–69.
4.
“American Airline CEO Blasts Dereg.”1987. Machinist, Vol. 42, No. 4 (August), p. 5.
5.
Association of Flight Attendants. 1985. “Who We Are, What We Expect.”Flightlog, Vol. 23, No. 3 (Fall), pp. 6–9.
6.
Association of Flight Attendants. 1991. “AFA National Survey Profiles Today's Safety Professional.”Flightlog, Vol. 28, No. 1 (Winter), pp. 7–10.
7.
BaileyElizabeth E., and WilliamsJeffrey R.. 1988. “Sources of Economic Rent in the Deregulated Airline Industry.”Journal of Law and Economics, Vol. 31, No. 1 (April), pp. 173–202.
8.
JohnsonBrownNancyRakesh Sambharya, and BobkoPhilip. 1989. “Deregulation, Business Strategy, and Wages in the Airline Industry.”Industrial Relations, Vol. 28, No. 3 (Fall), pp. 419–30.
9.
CappelliPeter, and HarrisTimothy H.. 1985. “Airline Union Concessions in the Wake of Deregulation.”Monthly Labor Review, Vol. 108, No. 6 (June), pp. 37–39.
10.
CardDavid. 1986. “The Impact of Deregulation on the Employment and Wages of Airline Mechanics.”Industrial and Labor Relations Review, Vol. 39, No. 4 (July), pp. 527–38.
11.
CardDavid. 1989. “Deregulation and Labor Earnings in the Airline Industry.” Princeton Industrial Relations Section Working Paper No. 247, Princeton University.
12.
DickensWilliam T.1986. “Wages, Employment, and the Threat of Collective Action by Workers.” NBER Working Paper No. 1856.
13.
DiNunnoGary. 1991. “ALPA Carriers Through the Years.”Air Line Pilot, Vol. 60, No. 7 (July), pp. 38–49.
14.
DooleyFrank J.1994. “Déjà Vu for Airline Industrial Relations.”Journal of Labor Research, Vol. 15, No. 2 (Spring), pp. 169–90.
15.
DouglasGeorge W., and MillerJames C.III. 1974. Economic Regulation of Domestic Air Transport: Theory and Policy. Washington, D.C.: Brookings Institution.
16.
EhrenbergRonald G.1979. The Regulatory Process in Labor Earnings. New York: Academic Press.
17.
HendricksWallace. 1975a. “The Effect of Regulation on Collective Bargaining in Electric Utilities.”Bell Journal of Economics, Vol. 6, No. 2 (Autumn), pp. 451–65.
18.
HendricksWallace. 1975b. “Labor Market Structure and Union Wage Levels.”Economic Inquiry, Vol. 13, No. 3 (September), pp. 401–16.
19.
HendricksWallace. 1977. “Regulation and Labor Earnings.”Bell Journal of Economics, Vol. 8, No. 3 (Autumn), pp. 483–96.
20.
HendricksWallaceFeuillePeter, and SzerszenCarol. 1980. “Regulation, Deregulation, and Collective Bargaining in Airlines.”Industrial and Labor Relations Review, Vol. 34, No. 1 (October), pp. 67–81.
21.
HirschBarry T.1988. “Trucking Regulation, Unionization, and Labor Earnings, 1973–85.”Journal of Human Resources, Vol. 23, No. 2 (Spring), pp. 296–319.
22.
HsiaoCheng. 1986. Analysis of Panel Data. New York: Cambridge University Press.
23.
International Association of Machinists. 1980–94 (monthly). Receipts and Disbursements: Report of the General Secretary-Treasurer.
24.
KahnAlfred E.1988. “Surprises of Airline Deregulation.”American Economic Review, Vol. 78, No. 2 (May), pp. 316–22.
25.
KeelerTheodore E.1972. “Airline Regulation and Market Performance.”Bell Journal of Economics, Vol 3, No. 3 (Autumn), pp. 399–424.
26.
MooreThomas Gale. 1986. “U.S. Airline Deregulation: Its Effects on Passengers, Capital, and Labor.”Journal of Law and Economics, Vol. 29, No. 1 (April), pp. 1–28.
27.
MorrisonSteven, and WinstonClifford. 1986. The Economic Effect of Airline Deregulation. Washington, D.C.: Brookings Institution.
28.
NielsenGeorgia P.1982. From Sky Girl to Flight Attendant. Ithaca, N.Y.: ILR Press.
29.
NorthrupHerbert R.1983. “The New Employee-Relations Climate in Airlines.”Industrial and Labor Relations Review, Vol. 36, No. 2 (January), pp. 167–81.
30.
PeoplesJamesJr.1990. “Airline Deregulation and Industry Wage Levels.”Eastern Economic Journal, Vol. 16, No. 1 (January—March), pp. 49–58.
31.
RoseNancy L.1987. “Labor Rent Sharing and Regulation: Evidence from the Trucking Industry.”Journal of Political Economy, Vol. 95, No. 6 (December), pp. 1146–78.
32.
RuppenthalKarl M.1987. “U.S. Airline Deregulation—Winners and Losers.”Logistics and Transportation Review, Vol. 23, No. 1 (March), pp. 65–82.
33.
ThornicroftKennethW.1989. “Airline Deregulation and the Airline Labor Market.”Journal of Labor Research, Vol. 10, No. 2 (Spring), pp. 163–81.
34.
U.S. Civil Aeronautics Board, Costs and Statistics Division, Bureau of Accounts and Statistics. 1959–92. Air Carrier Financial Statistics, various issues. Washington, D.C.
35.
U.S. Civil Aeronautics Board, Costs and Statistics Division, Bureau of Accounts and Statistics. 1959–92. Air Carrier Traffic Statistics, various issues. Washington, D.C.
36.
U.S. Civil Aeronautics Board, Costs and Statistics Division, Bureau of Accounts and Statistics. 1959–84. Form 41, P Schedules. Washington, D.C.
37.
U.S. Code. 1926. Railway Labor Act, Title 45, #151–188. Washington, D.C.: U.S. GPO.
38.
U.S. Department of Labor, Bureau of Labor Statistics. 1993a. Current Population Survey Labor Abstracts 1979–1991, CD-ROM. Washington, D.C.
39.
U.S. Department of Labor, Bureau of Labor Statistics. 1993b. Employment and Earnings. Washington, D.C.
40.
U.S. Department of Labor, Bureau of Labor Statistics. 1993c. Employment, Hours, and Earnings. Washington, D.C.
41.
U.S. Department of Labor, Bureau of Labor Statistics. 1993d. Handbook of Labor Statistics. Washington, D.C.
42.
U.S. Department of Transportation. 1985–1992. Form 41, P Schedules. Washington, D.C.
43.
U.S. Department of Transportation, Costs and Statistics Division, Bureau of Accounts and Statistics. 1959–78. Handbook of Airline Statistics, various issues. Washington, D.C.
44.
WeissLeonard W.1966. “Concentration and Labor Earnings.”American Economic Review, Vol. 56, No. 1 (March), pp. 96–117.
