The Long-Run Effects of Right to Work Laws


Matthew Lilley and Benjamin Austin. Working Paper. “The Long-Run Effects of Right to Work Laws”.
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In recent decades, states with Right-To-Work (RTW) laws have experienced higher employment and population growth than states without such laws. We investigate the extent to which these patterns, and other related labor market phenomena, are causally explained by these laws and closely related policies.  Using border-pair differences, we find RTW laws are associated with a 3.2 percentage point increase in the manufacturing share of employment.  This does not merely crowd out other economic activity; people who live in RTW regions have 1.6 percentage points higher employment, 1.4 percentage points higher labor force participation, and 0.34 percentage points lower disability receipt than residents of similar non-RTW areas. However, wages and labor compensation do not appear to be lower on average. In turn, these differences appear to influence both individual residence and workplace location choice. Since their passage, locations with RTW laws have seen higher population growth, and on net attract commuters from non-RTW locations. We investigate downstream effects on socioeconomic outcomes, and find lower childhood poverty rates and greater upward mobility. In particular, children at the 25th percentile of the parental income distribution during childhood have a 1.6 percentage point higher probability of reaching the top income quintile during adulthood if they grew up in a RTW location. These differences in outcomes were not present prior to the passage of RTW laws, persist after controlling for other major policy differences between states, and do not appear primarily attributable to local substitution.


Last updated on 11/13/2021