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Earnings, Rents, and Competition in the Airline Labor Market

Barry T. Hirsch and David A. Macpherson
Journal of Labor Economics
Vol. 18, No. 1 (January 2000), pp. 125-155
DOI: 10.1086/209953
Stable URL: http://www.jstor.org/stable/10.1086/209953
Page Count: 31
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Earnings, Rents, and Competition in the Airline Labor Market
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Abstract

This article offers an explanation of the postinjury employment, wage, and accommodation patterns of permanently impaired workers. In particular, it argues that the observed tendency of time‐ofaccident employers to rehire at the preinjury wage, accommodate, and then, perhaps, quickly terminate the impaired worker, is a manifestation of the worker's preferred contract. That contract is characterized by wage inflexibility. By removing the opportunity for the postinjury employer to underreport productivity, this contract creates an incentive for the worker to attempt to functionally adapt to the impairment, thereby increasing expected lifetime utility.

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