Right to Work Laws: New Evidence from the Stock Market
Posted: 14 Aug 2000
This article is an empirical examination of whether or not stockholder wealth rose in response to passage of right-to-work laws - state laws banning union shop clauses from collective bargaining agreements. Stockholder wealth rose when Louisiana passed such a law in 1976 and when Idaho did so in 1985-86 (for corporations located in the relevant state). Presumably this occurred because investors anticipated higher future profits with weaker labor unions and/or a lower probability of future organization. This is new evidence that such laws are more than symbolic: they hamper labor unions.
JEL Classification: J5, K3
Suggested Citation: Suggested Citation