Content area
Full Text
Abstract
Economic theory suggests that the enhanced product market competition of deregulation reduces employers' ability to discriminate when hiring. Recent studies of the effect of deregulation on racial employment in the naturally competitive trucking industry find that deregulation increased minority employment. This study examines the effect of deregulation on racial employment in the airline industry. Because deregulation transformed airlines from wasteful service competition to rigorous price competition, deregulation's effect on racial hiring in this continuously competitive industry is not apparent. This study finds that deregulation only modestly changed the racial composition of major airline occupations, which suggests that the change in market structure as a result of deregulation may largely determine the effect of regulatory reform on the racial composition of an industry. © 2001 by the Association for Public Policy Analysis and Management.
INTRODUCTION
In a seminal contribution to the economics literature, Gary Becker (1957) argues that firms in non-competitive industries have more latitude to discriminate than their counterparts in competitive industries. Moreover, it is the profit in non-competitive industries that provides a means for employment discrimination to occur.
The literature offers two approaches to examining the relationship between market structure and employment discrimination. Researchers measure the effect of market concentration on the racial composition of a cross-section of workers from many industries (Comanor, 1973; Haessel and Palmer, 1978; Shepherd and Levin, 1973). Or, researchers measure the effect of deregulation on racial hiring in an industry through a case-study approach (Agesa, 1998; Heywood and Peoples, 1994). An advantage of the case-study approach is that it allows the comparison of racial hiring in a single industry under opposing market structure. As a result, this approach is not subject to industry heterogeneities that have plagued multiple industry analyses in the past.
The current body of literature of deregulation's effect on racial employment focuses on the trucking industry (Agesa, 1998; Heywood and Peoples, 1994). The findings of these analyses suggest that minority employment increased markedly following deregulation.1 Increased minority employment is attributed to employers having less market power and, as a consequence, less latitude to discriminate in the competitive environment of trucking deregulation.
However, a question arises: Should the results of deregulation's influence on racial employment in trucking be the model of the effect of regulatory...