Earnings, rents, and competition in the airline labor market

Transformation of the airline labor market continues long after deregulation. Airline wages changed little immediately following deregulation, implying either the absence of regulatory rents or maintenance of product market power and union strength. Analysis for 1973-97, however, indicates that prior to recent gains, the relative earnings of air transport workers decreased markedly during the latter half of the 1980s and the early 1990s. Some of the earnings advantage of airline workers represents returns to occupational skills and worker-specific quality. Labor rents are attributable largely to union bargaining power, which, in turn, is constrained by the financial health of carriers.