Railroad Deregulation: Pricing Reforms, Shipper Responses, and the Effects on Labor

INDUSTRIAL AND LABOR RELATIONS REVIEW, October 1996

Posted: 28 Jun 1998

See all articles by James M. MacDonald

James M. MacDonald

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Linda C. Cavalluzzo

CNA Corporation

Abstract

The Staggers Rail Act of 1980 relaxed restrictions on pricing and eased abandonment procedures in the railroad industry. Although the Act made virtually no reference to labor, its impact on labor has been dramatic. The long-term contraction of industry employment accelerated quite sharply after 1980. Wages increased until 1985, then declined substantially. The authors, whose empirical analysis uses data on aggregate rail employment for the years 1963-90, Current Population Survey data for 1973-88, and evidence from collective bargaining agreements for 1971-90, argue that pricing adjustments under the Staggers Act led to changes in shipper behavior, which in turn allowed for large declines in the derived demand for rail labor despite increasing output, and the observed pattern of wage change followed from the realization of the Act's eventual effects on employment.

JEL Classification: J23, L92, R48, K23

Suggested Citation

MacDonald, James M. and Cavalluzzo, Linda C., Railroad Deregulation: Pricing Reforms, Shipper Responses, and the Effects on Labor. INDUSTRIAL AND LABOR RELATIONS REVIEW, October 1996. Available at SSRN: https://ssrn.com/abstract=3166

James M. MacDonald (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
(202) 694-5610 (Phone)

Linda C. Cavalluzzo

CNA Corporation ( email )

4825 Mark Center Dr #100
Alexandria, VA 22311
United States
703-824-2197 (Phone)
703-824-2256 (Fax)

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