International trade has been in existence for thousands of years, and as nations began shipping goods on the high seas (an efficient way to transport large quantities of goods over long distances), problems began to arise. If a ship flying a Greek flag with a Spanish captain and Portuguese crew carrying a cargo from Italy encountered problems in a French port, which nation's laws should have jurisdiction? It was from this need to regulate and protect international shipping that maritime law was developed. The tradition and regulations associated with maritime law remain in force to this day, and maritime law remains one of the oldest examples of international law in existence. This research considers the unique aspects of the maritime industry and one area of maritime law, wages, in relation both to the industry itself and in relation to economic theory.
The merchant marine industry can be equated to the trucking industry, with the difference that many merchant vessels are involved in international trade. Similar to trucks on land, merchant vessels carry a particular cargo from one point to another, and receive payment based on each voyage. Some vessels are specialized (such as oil tankers and automobile transports) while others are general purpose vessels capable of lading containers or crated goods. Merchant vessels carry the flag of the nation where they are registered; these registries can be "flags of convenience" (FOC) meaning that the ship's owners may have very few ties to the nation of registry, or vessels may carry the registration of their "home" country. Panama and Liberia are two countries which routinely issue FOCs, and they do so for relatively low fees. However, these nations are also slow to enforce basic standards on vessels flying their flags (Williams, 2001).
Manning costs (the costs associated with staffing a particular vessel for a particular voyage) are among the most sensitive costs to ship owner...