Why Aren't All Truck Drivers Owner-Operators? Asset Ownership and the Employment Relation in Interstate For-Hire Trucking

Olin Working Paper Series, Working Paper No. 97-06

Posted: 12 Apr 1999

See all articles by Jackson A. Nickerson

Jackson A. Nickerson

Washington University in St. Louis - John M. Olin Business School

Brian S. Silverman

University of Toronto - Rotman School of Management

Date Written: January 1999

Abstract

Institutional economists have frequently cited trucks as prototypical user-owned assets, due to the perceived generic nature of such vehicles and the difficulty of monitoring their treatment by drivers. These scholars have consequently predicted a high prevalence of owner-operator drivers who contract with motor carriers. In fact, employment relations in the interstate trucking industry bear little resemblance to these predictions.

Why does the reality of the interstate trucking industry differ so substantially from the predictions of institutional economists? We find that transaction costs are indeed important in the trucking industry, but those that influence the employment mode for drivers are somewhat different than those that have received attention in prior work. Notably, for trucking whose characteristics involve high levels of coordination, a type of temporal specificity is created. In addition, when carriers invest in reputation in the product market, such investments may lead to the integration in the factor market. We hypothesize that carriers favor the use of company drivers over owner-operators when these two characteristics are present.

JEL Classification: L92

Suggested Citation

Nickerson, Jackson A. and Silverman, Brian S., Why Aren't All Truck Drivers Owner-Operators? Asset Ownership and the Employment Relation in Interstate For-Hire Trucking (January 1999). Olin Working Paper Series, Working Paper No. 97-06. Available at SSRN: https://ssrn.com/abstract=157354

Jackson A. Nickerson (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-6366 (Phone)
314-935-6359 (Fax)

Brian S. Silverman

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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