Right‐to‐Work Laws: New Evidence from the Stock Market

Abstract

This article is an empirical examination of whether or not stockholder wealth rises in response to passage of a right‐to‐work law—a state law banning union security clauses from collective bargaining agreements. Stockholder wealth rose when Louisiana passed such a law in 1976 and when Idaho did so in 1985‐1986. Presumably this occurred because investors anticipated higher future profits with weaker labor unions or a lower probability of future organization. This is new evidence that such laws are more than symbolic: They hamper labor unions.

Financialization and Fictitious Capital: The Rise of Financial Securities as a Form of Private Property

“…It is not surprising, therefore, that economists find that strikes and labor disputes are associated with a decline in stock prices (e.g., Becker and Olson 1986; Abowd 1989; Nelson, Amoako-Adu, and Smith 1994; Dinardo and Hallock 2002), while wage concessions and approval of “right-to-work” laws contribute to rising stock prices (e.g., Becker 1987; Thomas, Officer, and Johnson 1995; Abraham and Voos 2000). Evidence of the link between labor disputes and stock prices can also be found in the financial media, and this is perhaps the only context in which it covers labor-related issues (for recent examples, see Kilgore 2017; Meijer and Kar-Gupta 2018; Owusu 2018; Riley 2018).…”

What Are the Consequences of Right-to-Work for Union Membership?

“…Concern about simultaneity bias was often addressed (Warren and Strauss 1979;Wessels 1981;Farber 1984;Koeller 1985;Moore et al 1986; Davis and 1 Right-to-work potentially affects a number of outcomes beyond the rate of unionization. Outcomes studied in previous work include manufacturing activity (Holmes 1998), stockholder wealth (Abraham and Voos 2000), earnings (Reed 2003;Farber 2005;Gould and Shierholz 2011;Bruno, Zullo, Manzo, and Dickson 2015;Gould and Kimball 2015), business conditions (Stevans 2009), and union finances and political outcomes (Feigenbaum, Hertel-Fernandez, and Williamson 2019).…”