Working Paper: NBER ID: w5687
Authors: 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.
Keywords: Deregulation; Labor Earnings; Airline Industry
JEL Codes: J31; L93
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Deregulation (L51) | Decline in relative earnings of airline workers (J31) |
| Deregulation (L51) | Increased competition and market dynamics (D49) |
| Increased competition and market dynamics (D49) | Decline in relative earnings of airline workers (J31) |
| Deregulation (L51) | Increased wage dispersion within the airline industry (J31) |
| Deregulation (L51) | Wage losses for displaced airline workers (J65) |
| Wage losses for displaced airline workers (J65) | Wage losses similar to other industries (J39) |