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Right-to-work laws and venture capital investment

Author

Listed:
  • Sarkodie, Helena
  • Boasiako, Kwabena
  • Keefe, Michael O’Connor
  • Nguyen, Justin
  • Tawiah, Bernard

Abstract

Using state-level data from the United States covering the period 1980 to 2020, we explore the effect of right-to-work (RTW) laws on venture capital (VC) investment. Employing a difference-in-differences strategy, we find that the passage of right-to-work laws increases venture capital investment. The results are robust to omitted variable bias, reverse causality and unobservable local economic conditions. We find that the positive effect of RTW laws on VC investments remains significant in states that are highly unionized and technological.

Suggested Citation

  • Sarkodie, Helena & Boasiako, Kwabena & Keefe, Michael O’Connor & Nguyen, Justin & Tawiah, Bernard, 2025. "Right-to-work laws and venture capital investment," Journal of Banking & Finance, Elsevier, vol. 172(C).
    • Handle: RePEc:eee:jbfina:v:172:y:2025:i:c:s0378426625000044
    DOI: 10.1016/j.jbankfin.2025.107383
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    More about this item

    Keywords

    Unionisation; Right-to-work (RTW) laws; Venture capital (VC) investment;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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