Pay, Reference Points, and Police Performance

No 12202, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Several theories suggest that pay raises below a reference point will reduce job performance. Final offer arbitration for police unions provides a unique opportunity to examine these theories, as the police officers either receive their requested wage or receive a lower one. In the months after New Jersey police officers lose in arbitration, arrest rates and average sentence length decline and crime reports rise relative to when they win. These declines are larger when the awarded wage is further from the police union's demand. The findings support the idea that considerations of fairness, disappointment, and, more generally, reference points affect workplace behavior.

JEL-codes: D0 H7 J0 J5 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-pbe
Note: LS
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Citations: View citations in EconPapers (172)

Published as Mas, Alexandre. "Pay, Reference Points, And Police Performance," Quarterly Journal of Economics, 2006, v121(3,Aug), 783-821.

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