The Impact of Deregulation on Labor Demand in Class-I Railroads

Document Type

Article

Publication Date

1-1-1995

Department

Political Science, International Development, and International Affairs

Abstract

This paper examines the impact of the Staggers Rail Act of 1980 on labor demand in Class-I railroads during 1961-1990. The demand for labor is a function of output, hourly wage rates, a time trend, and a vector of interactive dummy variables. Since deregulation, the labor demand curve has shifted downward; wage elasticities have become more elastic, ranging from -0.668 in 1980 to -1.187 in 1990; output elasticities trended upward from 0.557 to 0.809; and the marginal product of labor rose from 3.421 to 5.296 during 1980-1990. These findings suggest that unions' bargaining power has declined, that the total wage bill is likely to decrease if the real wage rate rises further, and that cost savings and efficiency gains are realized through increases in the marginal product of labor.

Publication Title

Journal of Labor Research

Volume

16

Issue

1

First Page

1

Last Page

8

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