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Collective Bargaining Laws and Threat Effects of Unionism in the Determination of Police Compenstation

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  • Richard B. Freeman
  • Casey Ichniowski
  • Harrison Lauer

Abstract

This study examines the effect of public sector unions on compensation packages. The model of the compensation determination process incorporates distinctive institutional aspects of public sector labor relations, particularly the differences in collective bargaining laws across states. The model is estimated using data on over 800 municipal police departments. Our results indicate that the effect of public sector unions depend critically on these institutional features of the public sector. First, unionism thrives only in those states with protective legislation. Second, in states where unionism has flourished,unionism exerts a strong upward pressure on both union and nonunion compensation packages. Cross section estimates for 1978 indicate that salaries of union and nonunion departments in highly unionized states are some 30% higher than are the salaries in states with low levels of unionism. However, no significant difference between union and nonunion salaries within states is observed. Before-after estimates of the "state-wide union effect" are more modest (9.9% to 18.1%). Finally, this "state-wide union effect" on union and nonunion departments appears to 'be even more pronounced on fringe benefits than it is on salaries. The net result is that in highly unionized states, a greater proportion of the larger compensation packages is paid in fringe benefits.

Suggested Citation

  • Richard B. Freeman & Casey Ichniowski & Harrison Lauer, 1985. "Collective Bargaining Laws and Threat Effects of Unionism in the Determination of Police Compenstation," NBER Working Papers 1578, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1578
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    Cited by:

    1. Richard B. Freeman & Robert Valletta, 1988. "The Effects of Public Sector Labor Laws on Labor Market Institutions and Outcomes," NBER Chapters, in: When Public Sector Workers Unionize, pages 81-106, National Bureau of Economic Research, Inc.
    2. Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630, Elsevier.
    3. Casey Ichniowski, 1988. "Public Sector Union Growth and Bargaining Laws: A Proportional Hazards Approach with Time-Varying Treatments," NBER Chapters, in: When Public Sector Workers Unionize, pages 19-40, National Bureau of Economic Research, Inc.

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