Trucking Deregulation and Labor Earnings: Is the Union Premium a Compensating Differential?

This paper examines wage determination among union and nonunion truck drivers using the 96 monthly Current Population Surveys for 1983-90. Union density in the previously regulated for-hire sector of the trucking industry fell from about 60 percent during the regulatory period of the 1970s to about 25 percent by 1990. Union log wage premiums fell from 0.40 in the 1970s to 0.30 or below in the 1980s. Longitudinal estimates from multiple panels for 1983-84 through 1989-90 suggest far smaller union premiums, supporting the thesis that part of the wage advantage following deregulation is a compensating differential for driver quality. The author appreciates the comments and suggestions of David Card, Jack Fiorito, William Linde, an anonymous referee, and seminar participants at Florida State University. David Macpherson assisted in creation of the data set, as well as providing comments.