Policy Research

Economic Growth and Right-to-Work Laws

Michael Hicks, Michael LaFaive

Summary

The authors study the effect of right-to-work laws on a state’s economic performance. The measures used are annual growth rates in employment, real personal income, population to measure the well-being of the state. The authors also study three separate time periods, arguing the economies are too dissimilar across years, the three time periods are 1947-1970, 1971-1990, 1991-2011. The authors find that right to work laws increased real personal income growth by 0.8 percent, increased annual population growth by 0.5 percent between 1947 and 2011, and from 1971 to 2011 right to work laws increased employment growth by 0.8 percent.

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Policy Implications

The authors results are somewhat out of line with literature on the subject, and appear to be somewhat manipulated. The authors do acknowledge that endogeneity, i.e. parceling out the effects of right to work as a policy as opposed to other economic trends, do present a challenge in their paper. However, the effects the authors found are very small. Yet, the authors fail to control for a number of variables that could lead to the same results, and consequently, it is difficult to certify their work on this matter.