Pay, reference points, and police performance

Alexandre Mas

Research output: Contribution to journalReview articlepeer-review

183 Scopus citations

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 in performance 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.

Original languageEnglish (US)
Pages (from-to)783-821
Number of pages39
JournalQuarterly Journal of Economics
Volume121
Issue number3
DOIs
StatePublished - 2006

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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