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To Protect and Serve: An Economic Investigation of Police Protection By Jarred T. Adamson.

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Presentation on theme: "To Protect and Serve: An Economic Investigation of Police Protection By Jarred T. Adamson."— Presentation transcript:

1 To Protect and Serve: An Economic Investigation of Police Protection By Jarred T. Adamson

2 September 11, 2001, Police and fire crews rush into the disheveled ruins of the WTC to protect the lives of the innocent. Less than one year later, police are called to protect the lives of innocent civilians at the El Air ticket counter.

3 The Hypothesis This thesis will investigate the proposition that police protection would be more efficiently allocated if transferred from the public sector to the private market.

4 History of Police Unions man strike lasting only a few hours 1918Wage lower than common laborer Most successful strike in history 1919Police could join established trade unions 6 monthsPublic employee unions terminated 1962JFK signs Executive Order CurrentIBPO and PPA conduct all police negotiations

5 Relevant Theories Macroeconomic Theory – Labor bidding – Essential goods and services Government Policies – Market efficiency vs. social concerns Public Finance Theory – Spill-over – Threat effects – Tiebout’s hypothesis

6 Benefit from Tiebout’s Hypothesis

7 Case Studies and Review of Literature Nature of unions creates an adversarial role Public interest vs. Employee’s right to strike City and state governments are forced to pay all negotiation costs within public sector negotiations Create compliant legislation that promote quick resolutions. Arbitrated salaries receives no advantage negotiated salaries Most effective forms of arbitration laws are the extreme forms.

8 Proposed Regression ln Average police salary =  (population, crime rate, density, median household income, cost of living, and a dummy variable representing the type of arbitration permitted)

9 Dummy Variable D1= 1 if forced bargaining and D1= 0 if otherwise. D2= 1 if bargaining permitted and D2= 0 if otherwise D3= 1 if bargaining is silent and D3= 0 if otherwise D4= 1 if bargaining is not permitted (cannot) and D4= 0 if otherwise D1, D2, D3, D4 = 0 if bargaining is not addressed (reference variable)

10 Regression Results

11 Significance of Data

12 Final Regression Outcome ln Average police salary = (ln population) (ln crime rate) (density) +.734(ln median household income) (ln cost of living) +.101(Forced Bargaining) (bargaining permitted) +.012(silent) +.107(cannot)

13 Conclusions There is not an inefficiency created by restricting the usage of police trade unions. Police unions should work towards creating legislation that is desirable for both parties. The most efficient technique is to provide police protection publicly while allowing private companies to provide additional protection to those desiring more.

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