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Abstract

The Staggers Act of 1980 largely deregulated the Class I Railroad industry and has had profound effects on labor. Between 1978 and 1994, employment in the industry decreased by about 60 percent, while real wages (average compensation) increased by over 40 percent. Earlier research examined employment effects; in this paper, we develop and estimate compensation effects using firm level data. By using firm level data, we can identify effects of partial deregulation, an accompanying and massive consolidation movement, and changes in firm operating and network characteristics. Our estimates suggest that mergers contributed 5 to 15 percent; partial deregulation contributed about 20 percent; and changes in firm operating and network characteristics contributed 4 to 5 percent to the overall increase in wages.

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