Policy Research

Exploring the Effect of Right to Work on Private Wages

Anthony Roberts, Robert Habans

Summary

The authors employed two analytical techniques to determine the economic effect(s) of right to work laws. First, the authors used a multi-level regression analysis to determine right to work law effects on individual hourly earnings and wage differences while controlling for demographics and regulatory characteristics of the state. Next, the authors employed a propensity-score matching technique, i.e. they took a sample of workers in right to work states and constructed a sample of workers that are similar on a number of levels in a non-right to work state, and compared the two groups. From the regression model, the authors determined that private workers in non-rtw states earn around 1% more than workers in right to work states. From their matching technique the authors estimated that workers in non-right to work states earned around 6% more than their counterparts in right to work states.

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Policy Implications

This research work is consistent with the majority of credible research on the subject, with the outcome being a slight negative effect as a result of right to work laws. The policy implications are straightforward; right to work laws have a negligible, if not harmful effect on state economic conditions.