Regulation and Labor Earnings

Abstract

This paper investigates the contention that workers in regulated industries receive economic rents as a consequence of the regulation. We argue that increases in wage levels due to entry regulation may be offset by employment stability guaranteed by this regulation and by increased reluctance of management to grant increases due to the type of profit regulation imposed. An empirical analysis compares earnings in seven occupations in fourteen regulated industries with earnings in other manufacturing industries. Earnings in the electric utility industry are also analyzed. Both studies are supportive of our argument.

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