Journal of Financial Economics Vol. 137 No. 2 2020
The economic impact of right-to-work laws: Evidence from collective bargaining agreements and corporate policies
Abstract
We analyze the economic and financial impact of right-to-work (RTW) laws in the US. Using data from collective bargaining agreements, we show that there is a decrease in wages for unionized workers after RTW laws. Firms increase investment and employment but reduce financial leverage. Labor-intensive firms experience higher profits and labor-to-asset ratios. Dividends and executive compensation also increase post-RTW. Our results are consistent with a canonical theory of the firm augmented with an exogenous bargaining power of labor and suggest that RTW laws impact corporate policies by decreasing that bargaining power.
- DOI
- 10.1016/j.jfineco.2020.02.005
- Volume
- 137
- Issue
- 2
- Pages
- 451-469
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref