U.S. air carriers and work-rule constraints – Do airlines employ an allocatively efficient mix of inputs?

John Bitzan and James Peoples

Research in Transportation Economics, 2014, vol. 45, issue C, 9-17

Abstract: Past research on the allocation of factor inputs for the airline industry suggests an overutilization of labor relative to other inputs immediately following deregulation. This study argues rigid work rules in conjunction with productivity improvements of nonlabor inputs may create an incentive for carriers to under-invest in labor relative to nonlabor inputs. Findings derived from estimating a long-run shadow cost function for this industry suggest that airlines over-employ non-labor inputs relative to labor. Simulations suggest potential savings ranging from 13 to 14 percent derived from satisfying the conditions of allocative efficiency for carriers in the study's sample.

Keywords: Allocative efficiency; Airline work rules; Translog cost function (search for similar items in EconPapers)
JEL-codes: D24 L93 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0739885914000237
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:retrec:v:45:y:2014:i:c:p:9-17

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_2&version=01

DOI: 10.1016/j.retrec.2014.07.002

Access Statistics for this article

Research in Transportation Economics is currently edited by M. Dresner

More articles in Research in Transportation Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().