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Introduction
The economic effects of unions have been the subject of extensive re-
search and debate among economists. In particular, the productivity effect
of unions has been a topic of interest to economists as well as business
establishments. The existing literature on this topic largely deals with the
private sector.' Public-sector studies are few and their findings diverge
considerably. For example, Allen (1986a, 1986b) reports the union effect
*The authors are affiliated, respectively, with the University of Akron, Emory University, and the
University of Akron. Send inquiries to Hashem Dezhbakhsh, Department of Economics, Emory
University, Atlanta, GA 30322-2240. We thank Daniel Levy for helpful comments, Ray Atkins for
research assistance, the Federal Bureau of Investigation for providing us with city-specific crime and
arrest data, major municipal police departments for responding to our survey, and the editor and three
anonymous referees for valuable comments. The usual disclaimer applies.
' Addison and Hirsch (1989) and Freeman and Medoff (1984, chapter 11) provide valuable reviews
of the private-sector union studies. This literature is replete with diverging views and unresolved issues.
INDUSTRIAL RELATIONS, Vol. 35, No. 4 (October 1996). © 1996 Regents of the University of California
Published by Blackwell Publishers, 238 Main Street, Cambridge, MA 02142, USA, and 108 Cowley
Road,Oxford,OX41JF, UK.
566
Unions and Police Productivity I 567
to be ambiguous for public school construction and insignificant for nurs-
ing home construction. Ehrenberg, Sherman, and Schwarz (1983) find the
union effect to be insignificant in the case of public library services, and
Noam (1983) reports a similar result for municipal building departments.
Ebert and Stone (1987), on the other hand, report the effect of teacher's
unions on students' performance to be positive and significant.
It is acknowledged that the dearth of public-sector union studies and their
confiicting results warrant further examination of the issue.^ Furthermore,
given that the public sector continues to grow despite its fiscal problems,^
any examination of its productivity seems to be well justified. This is particu-
larly true for police services, because public safety is an essential public
service and safety expenditures comprise a sizable portion of all local gov-
ernments' budgets. Nonetheless, no attempt has yet been made to examine
the union effect on police productivity. The neglect is probably because of
the difficulties in conceptualizing and quantifying police output."*
In general, any empirical analysis of unionism and productivity faces two
major challenges that must often be met with weak data. Thefirstis to define
operational measures of output and inputs. For many public services, this
task is further complicated by the difficulties of conceptualizing output and
productivity. The second challenge is to find a practical and justifiable set of
control variables that account for productivity differentials that are neither
union induced nor caused by a change in the level of inputs. The absence of
rigorous theory detailing the production process for many public services
makes it difficult to determine the corresponding control variables. These
challenges have hindered studies on police unionism and productivity.
We examine the effect of unions on police productivity under the afore-
mentioned measurement constraint. We use arrest-based output measures
to examine, in a production function context, the effect of unions on the
productivity of police departments in major U.S. metropolitan areas. Be-
cause of data exigencies, we concentrate only on crime repression — or the
punitive aspect of police services. Given that no data on police union-
ization were reaidily available,5 we conducted a survey of major municipal
police departments and compiled a data set that also draws on published
2 See, for example, Ehrenberg, Sherman, and Schwarz (1983), Ehrenberg and Schwarz (1986), and
Lewis (1990).
3 See Ehrenberg and Schwarz (1986) and Edwards and Field-Hendrey (1991) for related figures.
'' There are, however, a number of union-nonunion wage studies involving police departments, for
example, Ehrenberg (1980), Hall and Vanderporten (1977), and Bartel and Lewin (1981).
5 Aggregate data on the number of unionized police departments in each state are available in
Census of Governments, but such data do not contain a breakdown at city level and therefore cannot
be useful for our purpose.
568 / DENNIS BYRNE, HASHEM DEZHBAKHSH, AND RANDALL KING
*• Ehrenberg, Sherman, and Schwarz (1983) use another approach that involves estimation of a
reduced form output equation assumed to be linear in its arguments.
' We note that the limitations of the widely used production function tests have spawned some
criticism of the procedure. For example, the critics argue that such tests fail to discriminate between
marginal productivity differentials and union/nonunion price (wage) differentials. In response, private-
sector union studies have recently shifted attention from the union productivity issue to the union
profitability issue. A similar trend has not been observed for public-sector studies, probably because
profitability is not a stated objective of a public employer. Interested readers are referred to Hirsch
(;i991), Addison and Hirsch (1989), Reynolds (1986), and Mefford (1986).
"* Note that the assumption of constant returns to scale, imposed in earlier studies, is relaxed here by
allowing a+fi to differ from 1. This restriction will be tested in section 3. Other restrictions of the
Cobb-Douglas form, namely unitary elasticity of substitution, homotheticity, and homogeneity, remain
in place.
Unions and Police Productivity I 569
classified into two broad categories: one includes thefirstfour functions that
cover the traditional law enforcement role of police and the other includes
the last three functions that relate to public service duties.
Data on some law enforcement aspects of police activities are available.
The Federal Bureau of Investigation (FBI) surveys municipal police depart-
ments yearly and compiles data on the number of arrests and the crime
index, with a detailed breakdown into twenty different categories (FBI,
Crime in the United States, various issues). No usable data are collected,
however, on the recovery of property; neither are there any data available
on the public service activities of police departments. We therefore concen-
trate on law enforcement as the primary duty of police.
Furthermore, a distinction must be made between crime prevention and
crime repression. Prevention refers to instances where crime is contem-
plated but not committed, whereas repression implies that crime has oc-
curred. Because the preventive effect of police services cannot be directly
quantified, we confine our study to the repression of crime. Nonetheless, it
may be argued that criminals' decision to commit a crime is affected by
their perceived (or subjective) probability of being punished. This probabil-
ity is proportional to the probability of arrest given that a crime is commit-
ted.^ Therefore, any measure of police performance involving repression
of crime or apprehension of criminals is also a reasonable proxy for the
preventive aspect of police services (see Schmidt and Witte, 1984, p. 197).
To make equation (1) applicable to police services, some modifications
need to be made. In particular, A is decomposed into two multiplicative
terms, the constant of proportionality A' and a control variable C. The
production function is then expressed as
Q = A'CK"L^. (2)
In view of the earlier discussion of output, we define the number of arrests
as an empirical measure of police output. The control variable C is the
crime index for the municipality covered by a typical police department.
This specification allows for interaction between crime and police output
and also accommodates an important factual consideration. Given that
arrest-based measures are used as police output, output must tend to zero
disregarding the level of input utilization if no crime is committed. In our
proposed specification, Q is allowed to change positively with crime and to
approach zero in the limiting case of no crime. Entering crime as a multipli-
cative control variable satisfies this factual requirement.
' See, for example. Block and Heineke (1975) and Witte (1980) for a choice-theoretic analysis of
criminal behavior.
570 / DENNIS BYRNE, HASHEM DEZHBAKHSH, AND RANDALL KING
"* The tests reported in the section on model estimation support this specification in general.
Unions and Police Productivity I 571
nonunionized departments. The production functions have similar forms
but differ in parameters. A rearrangement similar to the one used to
derive equation (4) yields the equations:
ln((2 / L) = lnA/ + a^\n{K / L) + (a^ + /3« - l)lnL + lnC + £„ (5)
and
ln(Q / L) = \r\AJ + a,,ln(/C/ L) + {a, + /3,, - l)lnL + lnC -t- e,,, (5')
where n and u indicate nonunion and union status, and €„ and e,, are i.i.d.
error terms with zero mean.
Consistent estimation of equations (5) and (5') by least squares requires
the regressors to be exogenous — uncorrelated with the error term e (the
orthogonality condition). A close examination of these equations, however,
reveals that the crime index C does not satisfy this requirement, because the
decision to commit crime is influenced by the criminals' perceived (subjec-
tive) probability of getting arrested. Such probability is in turn affected by
police productivity in arresting criminals. So C depends on QIL, and QIL is
a function of e, so C and e are correlated and a simultaneity problem is
present. 11 The problem can be resolved by specifying a crime equation and
then either estimating the crime equation and equations (5) or (5') simulta-
neously, or substituting for crime from this equation into (5) or (5') and
estimating the resulting reduced form equations. The former approach is
structural and the latter is reduced form; we use both approaches to examine
the robustness of our findings.
To derive the reduced form, we first need to specify a crime equation.
We rely on the economic literature on crime and particularly the results
reported in Sjoquist (1973), Block and Heineke (1975), Witte (1980),
Schmidt and Witte (1984), Good, Pirog-Good, and Sickles (1986), and
TrumbuU (1989) to specify a crime equation.'^ Consider the following:
lnC - -Sln(G I L) + 0X+ ^, (6)
where S is a positive parameter, QIL is police productivity defined by any
of the measures of arrest per officer, 0 is a lxg parameter vector. A' is a g
" Other potential sources of simultaneity are K and L. The exogeneity of K and L can be tested
using Hausman's (1978) test for simultaneity. A significant test statistic indicates that the tested
regressors are correlated with the error term and a simultaneity problem is therefore present. We
performed this test but found no significant statistic at the 5 percent level. This suggests that capital
and labor are both uncorrelated with the error terms, and we henceforth treat them as exogenous
variables. This is consistent with Zax and Ichniowski's (1988) findings that police staffing and capital
expenditures are not affected by variables such as the union status of a department.
'2 There has been some controversy concerning the use of aggregate versus micro level data in crime
studies. Trumbull (1989) finds consistency between the results from the two types of data.
572 / DENNIS BYRNE, HASHEM DEZHBAKHSH, AND RANDALL KING
and
'3 Note that this equation may be equivalently expressed as C = (QIL) '^e""*-, where the lognormal
multiplicative error term e' is assumed to capture any approximation error resulting from this speci-
fication.
Unions and Police Productivity / 573
and
ln{e / L) = (/)„,„ + (/>,.«ln{iC / L) + (j>2jnL + $^X + u„, {8')
where (f),, = lnA'l{l + 8), </>, = a/(l + S), <^2 = {a+iS-l)/{l + S), the seven-
element vector cp* = 0/(1 +S), and v's are compound error terms. Note
that because 8 is positive, each of the coefficients of U, KIL, and L has the
same sign in equations {8) and {8') as in production function equations {5}
and {5'). The same is true for the coefficients of A'in equations {7) and {7')
and equations {8) and {8'). This makes the interpretation of the coeffi-
cients of equations {8) and {8') straightforward.
Data and survey. The cross-section data employed here are collected
from a number of published and unpublished sources. Given that data on
the union status of the municipal police departments were not available, we
surveyed 192 police departments in the largest U.S. metropolitan areas,
each with a population over 100,000 as of 1985. The questionnaire asked
whether the department had a written union contract already in place (at the
end of 1990), and if so, when the contract was initiated. We inquired specifi-
cally about a written contract because earlier studies suggest that a formal
contract affects municipalities differently than a less formal arrangement.
So we define a unionized department as one with a formal contract between
the municipality and the police union. We received 137 responses —a re-
sponse rate of over 71 percent. We compared two of the relevant characteris-
tics of cities that responded to our survey to those that did not. Population
and income differences between the two groups were statistically examined
using Wilcoxon's nonparametric two-sample rank test {see Randies and
Wolfe, 1979, chapters 2 and 3 for a discussion of the test). This test is
particularly chosen because of the nonnormality of population and income
distributions. The test statistic, which has a standard normal distribution
asymptotically, is significant for population data and insignificant for in-
come data; the values are, respectively, 1.56 and -2.99. The rank statistic
for population data suggests that the responding cities appear to be more
populated than the nonresponding cities. This is not surprising because
large city police departments are probably more image-conscious and thus
more willing to make a public relations gesture by responding to inquiries.
We did not perform similar tests for other variables because not much
insight is expected to be gained from such an exercise.
The samples compiled for this study consist of 137 data points, except in
cases of missing observations. The arrest data are extracted from unpub-
lished material furnished to us by the FBI. The crime data are obtained
from published sources compiled by the FBI (1983). The data on city
574 / DENNIS BYRNE, HASHEM DEZHBAKHSH, AND RANDALL KING
budget, police budget, and city unemployment rate are collected from the
Census of Governments (U.S. Department of Commerce, 1983). The data
oti demographic characteristics are taken from the City County Data Book
(U.S. Department of Commerce, 1983). Data from both sources are avail-
able in similar five-year intervals.
The FBI classifies its arrest data as total arrests, arrests related to more
serious crimes of murder, manslaughter, rape, robbery, assault, burglary,
and car theft, and arrests related to all other, mostly minor, offenses. We
use both arrest measures in our analysis. This allows us to inquire whether
the effect of unionization on police performance varies with the severity of
the related crimes. We refer to these as arrests related to serious crimes
and arrests related to minor crimes.
As stated earlier, we use the number of patrol officers to measure la-
bor.''* Because of the absence of relevant data, no adjustment is made for
labor quality. A direct measure of the capital stock of municipal police
departments is not available. A reasonable proxy, however, may be con-
structed as follows. An examination of total police expenditure over the
1970s and 1980s reveals that most police departments allocate over 90
percent of their capital expenditures to the purchase of new equipment,
with little spent to add or renovate the existing stock of buildings. More-
over, purchase of vehicles is the major component of police expenditure on
equipment. Consequently, the dollar value of vehicles in use by each police
department seems to be a reasonable proxy for capital measure (see
Reaves, 1988 for details). This measure is particularly appealing because
output is measured in terms of the number of arrests, and vehicles are an
important instrument for arresting criminals.
M We also used total police manpower to measure labor but our findings remained essentially
unchanged.
Unions and Police Productivity I 575
ments; unionization rate is 18 percent for the sample of southern cities but
65 percent for the entire sample.
Turning next to the input and output variables, unionized departments
on average use more capital and labor than their nonunionized counter-
parts. The mean capital-labor ratio, however, is 2.4 percent smaller for
unionized departments, but this difference is statistically insignificant.
Moreover, the average crime frequency appears to be higher in cities with
unionized police departments. Depending on the crime measure, the differ-
ential is 10.6 percent for serious crimes and 32.5 percent for minor crimes.
There is very little difference in the average number of total arrests in the
two subsamples. An examination of arrests stratified by the seriousness of
the committed crime, however, presents a different picture. Arrests re-
lated to serious crimes have a 20.4 percent larger mean in the union
subsample, whereas arrests related to minor crimes have a 3 percent larger
mean in the nonunion subsample. We also observe that arrests related to
serious crimes exceed serious crimes in all samples, probably as a result of
cases where multiple arrests are made in relation to one crime.
Crime and arrest data are categorized according to the severity of the
related crimes. This affords us the opportunity to use two measures of
output: arrests related to serious crimes and arrests related to minor
crimes, each in conjunction with the corresponding crime index. By using
different output measures we can examine whether the effect of unions on
police productivity is uniform across the two categories of crime.
We examine a number of relevant econometric issues before estimating
the models. First, we must deal with sample selection bias that is the result
of dividing the samples according to the union status (Heckman, 1979).
The nonrandom division of the sample causes the regression errors to have
a nonzero conditional mean, leading to inconsistent coefficient estimates.
The problem can be resolved by augmenting each regression equation by a
constructed regressor. The augmenting regressor in each equation is the
corresponding estimate of the expected error term conditional on union
status. The following procedure is used to construct the two augmenting
regressors (see, e.g.. Lee, 1978). A reduced form probit equation is speci-
fied with union status U as the dependent variable and factors that affect
unionization as the explanatory variables. In choosing these variables, we
follow the standard practice by defining the unionization probability as a
function of union-nonunion wage differential. We then substitute the wage
differential, which is not directly observable for a given police department,
with variables that may affect it. These variables include the exogenous
variables of the model —for example, income, unemployment rate, age,
population, and so on —and two dummy variables that characterize the
576 / DENNIS BYRNE, HASHEM DEZHBAKHSH, AND RANDALL KING
Notes: Entries are obtained by applying the least-squares method with selectivity adjustment to equations (8) and
(8'). Asymptotic t-statistics are in parentheses, and * and •* Indicate significance at the .10 and .05 levels,
respectively.
22 Given the result of this test, we also estimate the equation for serious crimes using the pooled
sample. Results, which are not reported here for brevity, are similar to the corresponding results for
union sample. Moreover, the estimated coefficient of the union dummy, which is included to isolate the
union effect, turns out to be insignificant, suggesting no union effect on police productivity with
respect to serious crimes.
23 Estimates of structural equations (5) and (5') and crime equations (7) and (7') are not reported
here, but they are available from authors.
580 / DENNIS BYRNE, HASHEM DEZHBAKHSH, AND RANDALL KING
TABLE 2
U N I O N - N O N U N I O N PRODUCTIVITY DIFFERENTIALS
Crime
Percentile
i Input Percentile (4()th) Input Percentile (60th) Average
Arrests Arrests Arrests Arrests Arrests Arrests
(serious crimes) (minor crimes) (serious crimes) (minor crimes) (serious crimes) (minor crimes)
Notes: Each differential is obtained by first estimating the difference between union and nonunion outputs from equations (5)
and (5'). These differences are computed using the estimated coefficients of (5) and (.5') and common input and crime
levels (various percentiles of capital, labor, and crime). Each difference is then converted to a percent differential using 100
(e'' - 1), where </ is the raw difference.
Also, note that average refers to average over lOth. 20th, •••, and up to 90th percentiles, 'indicates significance at the .i)fi
level and ""' indicates that the standard error for the marked differential cannot be computed.
Unions and Police Productivity I 581
4 contain the differentials (for each arrest measure) computed based on
the 40th and the 60th input percentiles. Columns 5 and 6 contain the
average differentials that are obtained by averaging the differentials com-
puted for all input percentiles (i.e., 10th, 20th, •••, through 90th). Also,
each row indicates what crime percentile is used to compute the corre-
sponding differential. The last row, labeled average, reports differentials
that are averaged over all crime percentiles (i.e., 10th, 20th, •••, through
90th). For example, a nonunion police department which is in the 60th
percentile in terms of size (input) and faces a median crime level has a 26
percent less minor-arrest productivity than its unionized counterpart which
utilizes identical input and faces a similar crime environment.^"*
The reported differentials point to a negligible union effect for serious
crimes and a sizable negative union effect for minor crimes. When the
differentials are averaged, the negative effect is around 26 percent for the
latter. We also note that an increase in crime percentile magnifies the
union effect; the same is true for input percentile. This scale effect suggests
that unionization in large departments and/or in large cities (with higher
crime rates) may lead to a greater loss in productivity than in small depart-
ments and/or cities.
The most salient implication of these results is that the effect of police
unions on arrest productivity varies with the output measure. Unions ap-
pear to have an asymmetric effect on police productivity — very little effect
on productivity with respect to serious crimes but a negative and signifi-
cant effect on productivity with respect to minor crimes. The overall effect
is also negative. In the remaining part of this section we offer explanations
for the observed asymmetric union effect.
The union productivity effect is usually considered to be a consequence of
union activity. A written union contract codifies work rules and forces man-
agement to allow employees to have input into setting work-related guide-
lines. For example, because of safety concerns in large cities where most
union departments are located, a union may negotiate a contract clause
requiring two officers in each patrol car. Such contractual obligation limits
departments from employing capital and labor in the most efficient way,
thus adversely effecting productivity. In general, union contract provisions
(grievance, sick leave, staffing requirements, wages, etc.) affect resource
allocation decisions of both employees and employers, often leading to
2'' Note that the standard error for each differential determines whether or not the differential is
statistically significant. The standard error for each average differential depends on the cross-
differential covariances which cannot be computed. No inference is therefore made regarding the
significance of the average differentials.
582 / DENNIS BYRNE, HASHEM DEZHBAKHSH, AND RANDALL KING
Concluding Remarks
This article examines the effects of unionism on police productivity.
Lack of an accepted and operational measure of police output has hin-
dered research in this area. We use two arrest-based measures of police
productivity in the context of a production function which includes crime
index as a control variable. Our cross section data includes published and
unpublished government statistics as well as our own survey of police
departments.
Results suggest that unions do not affect various categories of police
services uniformly. When output is stratified by the severity of crime, unions
appear to have no significant effect on police productivity with respect to
serious crimes, but they have a negative effect on productivity with respect
to minor crimes. These findings are consistent across reduced form and
structural models, indicating robustness to econometric specification.
In closing, we reiterate that the data limitations and measurement prob-
lems discussed in the article make it necessary to exercise caution when
interpreting the reported results. The issue of police productivity, how-
ever, is important and merits attention, particularly in light of the fiscal
and crime problems faced by many city governments.
^ For example, police departments actively supported the 1994 Crime Bill that provides for in-
creased police budgets and manpower. The presence of police unions probably facilitated such an
orchestrated lobbying effort.
Unions and Police Productivity / 583
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584 / DENNIS BYRNE, HASHEM DEZHBAKHSH, AND RANDALL KING