| Abstract: | This paper examines the effect of the announcement of various types of airline wage concessions on stock market value. Our results show that capital markets respond positively to wage cuts but not significantly to wage freezes or two-tier settlements. However, a significant intraindustry spillover effect from two-tier agreements was found that suggests that concessions by one carrier decreases the value of the remaining carriers. The results also vary by craft, indicating that labor market and institutional characteristics influence market response. |
