Right-to-Work Laws and State-Level Economic Outcomes: Evidence from the Case Studies of Idaho and Oklahoma Using Synthetic Control Method

Abstract

The role of right-to-work laws on state economies, labor organizations and employees are controversial and important policy questions. Empirical evidence is far from being conclusive predominantly due to identification issues. Using a recently developed econometric technique and exploiting the two most recent cases, -Idaho and Oklahoma- we examine the effectiveness of right-to-work laws on state-level outcomes. Our results indicate that the passage of right-to-work laws in Oklahoma affected union membership and coverage rates and, possibly to some extent, foreign direct investment. As for manufacturing employment, per capita income and average wage rates, we do not observe any impact. Our findings for Idaho, on the other hand, suggest that the laws increased the manufacturing employment, while it had no effect on per capita income and are inconclusive for foreign direct investment..Manufacturing Employment, Right-to-Work Laws, Synthetic Control Method, Unionization