Measuring the effect of arbitration on wage levels: The case of police officers

The authors empirically evaluate how the provision of an arbitration statut e affects police officers' wages by comparing wage levels across political jurisdictions and over time using a sample of states. Two complementary dat a sources are used: panel data for the years 1961-92 on state-level wages o f police officers, and individual-level data on police officers from the 19 70, 1980, and 1990 Decennial Censuses. The empirical results from both data sets are remarkably consistent and provide no robust evidence that the pre sence of arbitration statutes systematically affected overall wage levels. On average, the effect of arbitration was approximately zero, although the authors find substantial heterogeneity in the estimated effects across stat es.