Byrne, Dennis; Hashem Dezhbakhsh y Randall King (1996) Unions and Police

Productivity: An Econometric Investigation. Industrial Relations, volumen 35, número 4

(octubre de 1996). Cambridge, Massachusetts, Estados Unidos. Regents of the University
of California. Blackwell Publishers. Página 566 a 584.

Unions and Police Productivity:

An Econometric Investigation

DENNIS BYRNE, HASHEM DEZHBAKHSH, and

RANDALL KING*

We examine the effect of unionization on police productivity in large U.S.

metropolitan areas. We define police output in the context of a produc-
tion function model that draws also on the crime literature. We estimate
the resulting model using a data set that includes published and unpub-
lished government statistics as well as our own survey of police depart-
ments. Results suggest that the effect of unions on police productivity
varies according to categories of police performance. In particular, if
performance is stratified according to the severity of crimes, unions seem
to have an insignificant effect on police productivity with respect to seri-
ous crimes. For minor crimes, unionization alters the parameters of police
production function, leading to diminished productivity.

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

and unpublished government sources. The cross-section data cover 137 of

the largest U.S. metropolitan areas. Individual municipal police depart-
ments are chosen as the unit of analysis.
The article is organized as follows. First, we derive the empirical model,
discuss the measurement issues, and describe the data. Second, we report
specification tests and estimation results and present our interpretations.
Finally, we offer our concluding remarks.

Empirical Specification, Measurement Issues, and Data

Models and measurement. We adopt the production function approach
commonly used in union productivity studies.^ This approach involves
parameterizing a production function with a set of control variables, and
making inference about the parameters of the assumed function.^ Follow-
ing many union studies, we employ a variant of the Cobb-Douglas produc-
tion function. For a typical unit the function is
L^, (1)
where Q is output, K and L are capital and labor, a and j8 are parameters,
and A includes a constant of proportionality and a control variable.^ The
Cobb-Douglas form is adopted for its simplicity and also to facilitate com-
parison with earlier public-sector union studies (see, e.g., Ehrenberg, Sher-
man, and Schwarz, 1983; Noam, 1983; Allen, 1986a, 1986b; and Edwards
and Field-Hendrey, 1991).
Any reasonable measure of police output should reflect the functions that
a police department performs. The U.S. Department of Justice identifies
seven such functions: prevention of crime, repression of crime, apprehen-
sion of criminals, recovery of property, regulation of noncriminal activity,
performance of miscellaneous services, and protection of constitutional
guarantees (U.S. Department of Justice, 1982). These functions can be

*• 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

It is worth noting that this specification is equivalent to another specifica-

tion wherein the number of arrests per crime, QIC, is defined as police
output. The latter specification can be obtained by dividing both sides of
equation (2) by C and defining an index of crime cleared by arrests, QIC, as
police output in the resulting production function. An important advan-
tage of equation (2) over this alternative formulation is that (2) allows
crime to be treated as an endogenous variable that is infiuenced by the
number of arrests.
With few exceptions, union productivity studies introduce the union
effect as a shift parameter in a production-function-based regression. This
is done by modifying equation (2) as follows:
Q = A'C{1 + yU)K" L^ (3)
where Uisa binary variable that equals one if the department is unionized
and zero otherwise and y is the proportionate change in productivity result-
ing from unionization. We use the term unionization to mean that there is
a formal written contract in effect in the police department. Although
some officers may not join the union —there may be no union security
clause in the contract —all officers are covered by the terms and provisions
of the contract.
By dividing both sides of equation (3) by L, taking natural log, and
adding an error term, we obtain
ln((2 / L) - XnA' + yU + a\n{K / L) + (a + j8 - 1) lnL -I- lnC + e, (4)
where yU is the first-order Taylor series expansion of ln(l + yU) and e's are
independent and identically distributed (i.i.d.) errors with zero means. With
labor defined as the number of patrol officers, the police productivity is
measured by the number of arrests per patrol officer. Accordingly, a ceteris
paribus increase in the number of arrests per officer is viewed as enhanced
productivity. Note that because the crime index is used as a control variable
in the production function equation, it is reasonable to interpret a larger
number of arrests per officer, at a given level of input, as higher productivity.
The specification in equation (4) imposes the restriction that the produc-
tion functions for unionized and nonunionized departments are identical
except for a shift parameter. If such restriction is imposed incorrectly, the
resulting estimates will be statistically biased. To avoid this problem, we
use an alternative specification that allows all parameters of the produc-
tion function to change according to the union status.^'^ This involves esti-
mating two production functions, one for unionized and the other for

"* 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

element vector of exogenous variables affecting crime, and ^ is a normal

{0, (72^) error term." The literature on the economic model of crime pro-
vides the basis for selecting the variables in X. We use seven such vari-
ables; they represent the socioeconomic and demographic characteristics
affecting the crime rate. These variables are income, unemployment rate,
age, percentage minority, population, population density, and a regional
dummy. The first two variables, which represent economic characteristics,
are median income of city residents and local unemployment rate. The
remaining variables, which characterize social and demographic influ-
ences, are the median age of city residents, percent of blacks and Hispanic
residents, community population, population per square mile, and a bi-
nary variable that equals one if the community is in the southern region
and zero otherwise. We use the dummy variable to control for the fact that
southern states are traditionally less fertile ground for union activity than
the rest of the nation because of the right to work laws. The descriptive
statistics that we will discuss later support this point.
The functional form of equation {6) is specifically adopted to allow
crime to be negatively affected by police productivity QIL. This specifica-
tion which has a common place in the crime literature also accommodates
explicit reduced form solutions to equations {5} and {5'). We use the
following union and nonunion versions of equation {6):

and

lnQ = -8MQ I L) + 0,X + 4, (7')

where the parameters and variables are similar to those in equation {6) and
u and n subscripts denote union and nonunion status of the police depart-
ment in a metropolitan area. These crime equations can be used for struc-
tural and/or reduced form estimation.
The structural approach involves estimating equations {5) and {7) to-
gether and equations {5') and {7') together. The reduced form approach
involves substituting for C from equation {7) into equation {5) and from
equation {7') into equation {5') and then estimating the resulting reduced
form equations which are
L) = <!>„„ + (I>,M^ I ^ ) + <^2,«lnL + ^ X -f !;„ (8)

'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.

Model Estimation and Results

Before presenting the main results, we discuss briefiy the descriptive
statistics for variables of the model; these statistics are not reported for
brevity. Considering first the socioeconomic and demographic characteris-
tics, we observe that there is little difference between union and nonunion
subsamples in terms of income and age of the residents. Unionized depart-
ments, however, are more likely to be in larger and more densely popu-
lated areas. Cities with unionized police departments on average have 23
percent larger population and 67 percent higher population density when
compared to cities without a police union. Also, southern cities seem to
have a disproportionately smaller share of the unionized police depart-

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

legal structure of collective bargaining. One dummy measures whether a

bargaining law was in place in a department's home state as of 1982 (the
sample year), and the other measures whether a right-to-work law was in
place in the state as of 1982.15 Collective bargaining legislation, such as
right to strike, compulsory arbitration, and choice of procedure appear to
have significant effects on wage and union status of public-sector employ-
ees (see, e.g.. Freeman, 1986; Zax and Ichniowski, 1990; and Currie and
McConnell, 1991).'6
After estimating this probit equation, the fitted values, IJ's, are retrieved.
The augmenting variables, which are better known as selectivity vari-
ables, are - ^ for the union equation and j z ^ for the nonunion equa-
tion, where/(•) and E(-) are, respectively, the density and distribution func-
tions of a standard normal random variable. Finally, after these selectivity
variables are added to the union and nonunion equations, the parameters
are estimated using least squares method.'^ Because the usual least squares
standard errors are biased, with unknown direction, we use adjusted stan-
dard errors derived in Greene (1981) to avoid invalid inference.'^
Second, we test the difference between parameters of union and non-
union regression equations. The relevant test is the asymptotic likelihood
ratio (LR) test for parameter constancy (see, e.g., Godfrey, 1988, chapter
5). In large samples, the test statistic has a chi-square distribution with
degrees of freedom equal to the number of parameters tested. A signifi-
cant statistic suggests that coefficients are different and the two samples
should not be pooled. The LR statistic is computed from the reduced form
equations (8) and (8') which easily accommodate specification testing. The
statistics are reported in the bottom of Table 1.
Results. Estimates of the reduced form equations, (8) and (8'), are
reported in Table 1.'^ The equations are estimated for the two output
measures using the least squares method with selectivity adjustment. The
estimated labor coefficient is insignificant in all cases, supporting the pro-
duction function restriction a -I- /3 = l.^o The estimated coefficient of

'5 We collected the bargaining legislation data from PSRC (1982).

"> As noted by Hirsch and Addison (1986. chapter 3), direct measures of membership and organizing
costs of unions are rarely available. These costs are affected by political climate and labor legislation.
" See Heckman (1978) and Lee (1978) for selection bias in a simultaneous equation context and the
necessary corrective procedure.
'« See Heckman (1979) and Greene (1981) for theoretical details and LIMDEP User's Manuat,
Version 6.0, chapter 45 for computational details. We used LIMDEP software. Version 6.0, to carry
out all computations.
" Notice that only 128 observations are used instead of 137 because of missing data points.
2" We estimated the equations after enforcing this constraint (dropping labor), but the results
remained virtually unchanged in terms of the signs and significance of coefficients.
 Unions and Police Productivity I 577
TABLE 1
REDUCED FORM ESTIMATES: EQUATIONS (8) AND (8')

Dependent Variable—* Arrest (serious crimes)//. Arrest ( minor crimes)/L

Union Nonunion Union Nonunion
Regressorsi Sample Sample Sample Sample

Intercept 3.240 1.755 3.725 3.16

(4.05)** (1.85)* (3.96)** (1.96)*
KIL 0.271 0.235 0.387 0.052
(3.49)** (3.16)** (4.26)** (0.43)
L 0.118 0.042 0.156 -0.139
(1.10) (0.40) (1.24) (-0.81)
Income -0.0007 0.0006 -0.0004 0.0005
(-0.20) (0.12) (-1.03) (0.55)
Unemployment Rate 0.004 -0.021 0.0005 -0.074
(0.37) (-1.42) (0.04) (-2.79)**
Age -0.036 0.014 -0.021 0.066
(-2.52)** (0.56) (-1.26) (1.57)
Percent Minority 0.002 0.003 0.003 -0.009
(0.45) (0.60) (0.67) (-0.99)
Population 0.0002 0.0003 0.0004 0.0001
(1.04) (0.82) (2.25)** (0.16)
Population Density -0.0007 -0.039 0.012 -0.116
(0.04) (-1.48) (0.59) (-2.51)**
Region -0.079 0.002 -0.080 0.036
(-3.17)** (0.10) (-2.71)** (1.10)
Selectivity Variable -0.143 0.198 0.068 0.572
(-1.36) (0.87) (0.55) (1.57)
Diagnostics
Adjusted R^ 0.302 0.369 0.300 0.259
Akaike Information 0.139 0.775 0.192 0.198
Sample Size 82 46 82 46
LR Statistic for 15.779 85.571**
Par. Constancy

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.

capital-labor ratio is significant in both the union and nontinion equations

when the output is measured by arrests related to serious crimes, but for
arrests related to minor crimes the estimated coefficient is significant only
in union equation. The coefficient a is output elasticity with respect to
capital; given the production function restriction a + j3 = 1, a larger a
implies a smaller output elasticity with respect to labor, /3. This result
suggests that for minor offenses, unionization tends to enhance capital
productivity and lower labor productivity. One possible explanation is the
presence of union-negotiated contract clause that affects productivity. For
example, our data show that unionized departments are located in larger
578 / DENNIS BYRNE, HASHEM DEZHBAKHSH, AND RANDALL KING

cities where crime is higher. Consequently, safety may be more of a con-

cern to officers in these cities, so unions may negotiate a contract clause
requiring that each officer have a partner while on patrol. Such a require-
ment can easily contribute to the above productivity effect. Indeed, the
presence of similar provisions —for example, minimum aircraft crew size,
maximum apprentice-journeymen ratio, and other forms of mandatory
staffing —in union contracts is well documented (see, e.g., Addison and
Hirsch, 1989).
Coefficients of several other variables tend to change with union status.
Starting with demographic factors, the estimated coefficient of regional
dummy for the South is negative and significant in the union samples but
positive and insignificant in the nonunion samples. This variable is in-
cluded to control for the regional differences discussed earlier. Coefficient
estimates suggest that unionized police departments in the South have a
smaller arrest productivity than their counterparts nationwide. A possible
explanation for this effect is that southern states are less receptive to
unions, so unions are less able in these states, than elsewhere, to negotiate
a positive wage differential. Instead, they may resort to contract clauses
that lead to a reduction in the total work performed by the department.^i
Estimates of the minority coefficient are positive and insignificant for
both output measures in the union equations. A different pattern is ob-
served in the nonunion equations, where the estimates are negative and
insignificant for arrests related to minor crimes and positive and insignifi-
cant for arrests related to serious crimes. The similarity of the estimated
signs for arrests related to serious crimes in the union and nonunion sam-
ples probably reflects the similarities between the way union and nonunion
police departments investigate such crimes; however, we must exercise
caution when drawing inference from an insignificant estimate.
Moreover, the estimate of population coefficient has a positive sign in all
samples and for both output measures. The estimate is significant for
union samples when output is measured in terms of arrests related to
minor crimes. This implies that unionized police departments have a
higher arrest productivity in larger cities, probably as the result of higher
crime rates in these cities. The correlation between population and arrest
per officer appears to be driven by the relationship between population
and crime. This indirect relationship is more pronounced in the union
equation because unionized departments are concentrated in larger cities.
2' Additional experiments, not reported here, show that eliminating the regional dummy leaves the
signs of other coefficient estimates unchanged but reduces the explanatory power of the regression
models.
 Unions and Police Productivity I 579
Estimated coefficients of the economic variables (income and unemploy-
ment rate) have different signs in the union and nonunion samples. These
estimates, however, are insignificant in all but two cases and do not reveal
a consistent picture of the union effect.
We also note that the LR test for parameter constancy is significant for
arrests related to minor crimes but insignificant for arrests related to seri-
ous crimes, suggesting that in the latter case the coefficients are similar for
union and nonunion equations.22 An implication of this result is that
unionization does not seem to affect police performance when investigat-
ing serious crimes. The LR statistic is significant, however, for minor
crimes, implying the presence of union productivity effect. In the next
section, we estimate the resulting productivity differentials and suggest
some possible explanations for the asymmetric effect of unions on the two
arrest categories.
We also estimate structural equations (5) and (5') jointly with crime
equations (7) and (7') in order to examine the robustness of our findings to
alternative specification of the model.^3 The method of estimation is two
stage least squares with selectivity adjustment. These results are not re-
ported for economy of presentation but the highlights are as follows. Esti-
mated coefficients for the input variables are remarkably similar to those
reported for the reduced form models. Estimates of the labor coefficient
are insignificant, supporting the a+/3 = 1 restriction. Estimates of KIL
coefficient a are positive and significant in the union equation but insignifi-
cant in the nonunion equation when arrests related to minor crimes mea-
sure the output. This suggests a larger a (and thus a smaller ]8) for the
union sample in this output category, implying a union-induced reduction
in relative labor productivity which, as argued earlier, could be because of
the contract clause regarding staffing of police cars. For serious crimes, in
contrast, increased capital utilization has a positive effect on police produc-
tivity regardless of the union status. This finding accords well with our
earlier results and the LR test for parameter constancy, suggesting that
there is not much difference between union and nonunion departments
when it comes to dealing with serious crimes. We also note that crime has a
positive sign as expected in all samples and for all output definitions.

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

Productivity differentials. Our results so far suggest that unions seem to

have an insignificant effect on police productivity in the case of serious
crimes and a significant effect in the case of minor crimes. To ascertain
whether unionization has a positive or negative effect on police perfor-
mance in the latter case, we estimate union-nonunion productivity differen-
tials. We use the estimated coefficients of the structural equations (5) and
(5') for this purpose so that we can also examine the effect of change in
crime level on these differentials.
Each differential estimates the percentage difference in the expected
output of otherwise identical union and nonunion police departments. We
estimate these expected outputs using the estimated coefficients of equa-
tions (5) and (5') and common input and crime levels. By using common
input and crime levels, we simulate a situation wherein union and non-
union departments face identical crime environments and utilize identical
input quantities to fight crime. The input and crime levels are various
percentiles of capital, labor, and crime averaged over union and nonunion
samples. For example, we obtain the common 50th percentile (median) for
capital by ordering the capital data for union and nonunion samples sepa-
rately, obtaining the median capital for each sample, and averaging the
two medians. We compute common labor and crime levels in a similar
manner.
The differentials are computed for both measures of output (arrest
types), with the corresponding crime data matching the arrest type. Esti-
mates of the productivity differentials are reported in Table 2. Columns 1-

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)

2()th -5,5% -40,5%* -4,9% -32,6%* -4,8%"»- -34,l%""-

4()th -0,6% -43,2%* 0,0% -28,3%* 0, ! % " • ' ' • -29,8%"''-
5()th 2,7% -41,3%* 3,3% -26,0%* 3,5%""- -27,5%"''-
6()th 5,5% -39,4%* 6,2% -23,6%* 6,4%"''- -25,2%""'
Average 3,8%""- -39,6%"- 4.4%".». -24,7%-- 4,6%"»- -26,3%""'

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

efficiency loss. The adverse productivity effect of such provisions is more

significant in the public sector where, in absence of product market competi-
tion, there is little or no pressure to mitigate the efficiency loss (see, e.g.,
Addison and Hirsch, 1989). Finally, there may be institutional reasons for
the observed productivity effect. Most of the unionized departments are
located in large cities where prisons may be overcrowded. To help alleviate
overcrowding in both the criminal justice and penal systems, police officers
in these cities may have an incentive to limit arrests for relatively minor
offenses. Also, police unions may give a higher priority to fighting serious
crimes and thus direct more resources toward it. Solving serious crimes gives
the department high visibility and helps the police gain public support for
their public policy objectives.^ Both of these factors could explain, at least
partially, the observed asymmetric effect of unionization on different catego-
ries of arrest productivity. However, more research is needed to gain further
insight into the institutional mechanism through which police unions affect
productivity.

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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