New Evidence from the Stock Market on Right-to-work Laws

Abstract

The long-debated impact of right-to-work (RTW) laws took on more urgency with the passage of RTW in additional states in the twenty-first century. The impact of RTW on shareholder wealth of corporations located in four states is evaluated here: Oklahoma (2000), Indiana (2012), Michigan (2012), and Wisconsin (2015). Event study results show that RTW had a positive effect on shareholder wealth in these states, albeit an effect that was lower in Michigan than elsewhere. We argue that this is indirect evidence in support of research indicating that RTW hinders union organizing, raises profits, and reduces nonunion employee compensation.

Citation

Abraham, S.E. and Voos, P.B. (2019), "New Evidence from the Stock Market on Right-to-work Laws", Advances in Industrial and Labor Relations (Advances in Industrial & Labor Relations, Vol. 25), Emerald Publishing Limited, Leeds, pp. 219-246. https://doi.org/10.1108/S0742-618620190000025011