Law enforcement performance standards and wages: A test of the efficiency wage hypothesis

This study finds evidence that police officers are offered a wage premium over their alternate employment wage, offering support of an efficiency wage paid in this industry. It finds that law enforcement agency performance standards and wages are positively correlated, and provides insight in how the efficiency wage operates. Empirical evidence is found for both selection and incentive effects (adverse selection and shirking).;This study also finds evidence of the following: (1) The presence of a union in a law enforcement agency is associated with not only higher minimum wages of police officers and higher promotion wages, but higher performance standards of new hires as well. Unions are associated with more screening of applicants and more rejections of officers during their probationary period, both of which serve as entry barriers into the profession; (2) Officers must be compensated for the additional risk they take for working in high crime areas and the study is able to quantify the amount; (3) State public-official corruption is associated with the promotion wage premium of officers. This raises the question of attempted bribery of law enforcement management by corrupt public officials.;This study is unable to find evidence of a negative correlation between the racial composition of the police force, and hiring performance standards. This suggests no relationship between performance standards and race.