Deregulation and the Racial Composition of Airlines

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.