Does strike insurance matter? Evidence from the airline industry’s mutual aid pact

Despite a conducive environment, airline strike insurance did not significantly affect flight attendants’ and mechanics’ earnings and depressed pilots’ earnings by a barely statistically significant 3 percent. These results cast doubt on previous assertions that the demise of strike insurance, precipitated by the 1978 Airline Deregulation Act, improved unions’ relative bargaining power. Furthermore, the ineffectiveness of one of the most promising strike insurance pacts could explain the small number of such agreements in U.S. industries. The author may be contacted at the Department of Economics, Université du Québec à Montréal, CP 8888 Station A, Montréal, Québec, H3C 3P8, Canada. The author is grateful to Bill Dickens, Denise Jarvinen, Ted Keeler, Jonathan Leonard, James Peoples, Kenneth Train, and Marc Van Audenrode for many helpful comments. The author also thanks the Institute of Transportation Studies at the University of California at Berkeley, and the PAFACC at the Université du Québec à Montréal for generous financial support.