Three essays on intrastate deregulation and the labor market for truck drivers

Much of the literature on trucking deregulation reports evidence that union wage premiums of for-hire truck drivers are substantially higher than union premiums of the private carriage sector before and after interstate deregulation. Motivation for this study is an attempt to explain the cause of such large differences between union and nonunion wage compensation. A few studies have examined this difference in union premiums, Hirsch (1993) and Hirsch & Macpherson (1998), and have concluded that returns to experience is partial explanation for this difference. Chapter 1 of this study examines the differences in union wage premiums further to determine if driver experience alone explains this difference, or if something other than experience is creating this divergence.;Trucking deregulation began in the years just leading up to the Motor Carrier Act of 1980. This act eliminated federal rate and route regulations though initial steps toward deregulation were in motion years before the act. Teske, Best, and Mintrom (1994) testify that this act has merely brought a shift from federal control to state level regulations. As an outcome of this act most state governments adopted state level regulations nearly identical to the previous federal regulations. The shift toward state level regulations, or intrastate regulations, continued the potential for rent sharing and continued the potential for union drivers working in regulated states to maintain the ability to share union rents. In 1995 all state level regulations were abandoned with the Airport Improvement Act which significantly diminished the possibility of rent sharing. The elimination of rate and route regulations at eventually the state level would eliminate the possibility of rent sharing and therefore the large differences in union premiums would begin to disintegrate.;Chapter 1 of this study empirically tests intrastate deregulation's influence on union wage premiums. The methodology is similar in approach as Rose (1987), Hirsch (1993), and Hirsch and Macpherson (1998), but adds state regulatory intensity to the specifications. After conducting empirical analysis the evidence is in support of the union rent-sharing hypothesis that the erosion of union premiums of for-hire truck drivers converges to that of private carriage drivers. The elimination of rate and route regulation in 1995 has removed the ability of union truck drivers to share rents. Therefore, following complete deregulation of the trucking industry, union premiums of for-hire truck drivers should converge to private carriage premiums which were never affected by regulations. This study finds evidence that suggests that the additional union premium is explained partly as a union rent from continued state level regulation.;As a follow up to wage compensation trends, Chapter 2 tests for evidence of non-wage compensation spillover as a result of intrastate deregulation. Considering that union for-hire drivers had the ability to bargain for high wage compensation, this section follows trends of non-wage compensation questioning if fringe benefits are also dispersed as union rents. Using March CPS files the data is sorted according to regulatory era, pre and post AIA, and probit regressions are run for each sector and for each era. The results show that there is a lack of evidence of rent-sharing to for-hire drivers from non-wage compensation. These results are consistent with Alexis (1998) and the more recent Henrickson and Wilson (2008). This study also tests rent-sharing in the private carriage sector and the findings show that there is evidence of rent-sharing in this sector.;Previous studies also consider how the self-employed owner-operators are influenced by trucking deregulation. Some truck driver studies have reported that there exists a desire for independence in the trucking industry and their prevalence can be demonstrated by the existence of owner-operator truck drivers. This sector of the industry survived despite laws heavily regulating their employment opportunities. Before intrastate deregulation laws prohibited these drivers from joining unions and also from operating in nearly all of private carriage freight transportation. Chapter 3 in this study uses CPSORG data to analyze employment trends of the owner-operator truck drivers. Results from this section show that following intrastate deregulation the owner-operator employment shares fell slower in states previously regulated while their shares continue to fall over time. This is consistent with the existing literature as intrastate deregulation opened the door to substantial entry gains. Therefore opportunities opened for the owner-operators, just to a lesser extent than for-hire company truck drivers.