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Right‐to‐Work Laws: New Evidence from the Stock Market

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  • Steven E. Abraham
  • Paula B. Voost

Abstract

This article is an empirical examination of whether or not stockholder wealth rises in response to passage of a right‐to‐work law—a state law banning union security clauses from collective bargaining agreements. Stockholder wealth rose when Louisiana passed such a law in 1976 and when Idaho did so in 1985‐1986. Presumably this occurred because investors anticipated higher future profits with weaker labor unions or a lower probability of future organization. This is new evidence that such laws are more than symbolic: They hamper labor unions.

Suggested Citation

  • Steven E. Abraham & Paula B. Voost, 2000. "Right‐to‐Work Laws: New Evidence from the Stock Market," Southern Economic Journal, John Wiley & Sons, vol. 67(2), pages 345-362, October.
    • Handle: RePEc:wly:soecon:v:67:y:2000:i:2:p:345-362
    DOI: 10.1002/j.2325-8012.2000.tb00340.x
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    References listed on IDEAS

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    1. Edward J. Schumacher, 1999. "What Explains Wage Differences Between Union Members and Covered Nonmembers?," Southern Economic Journal, John Wiley & Sons, vol. 65(3), pages 493-512, January.
    2. Burgstahler, D & Noreen, Ew, 1986. "Detecting Contemporaneous Security Market Reactions To A Sequence Of Related Events," Journal of Accounting Research, Wiley Blackwell, vol. 24(1), pages 170-186.
    3. Ichniowski, Casey & Zax, Jeffrey S, 1991. "Right-to-Work Laws, Free Riders, and Unionization in the Local Public Sector," Journal of Labor Economics, University of Chicago Press, vol. 9(3), pages 255-275, July.
    4. Abowd, John M, 1989. "The Effect of Wage Bargains on the Stock Market Value of the Firm," American Economic Review, American Economic Association, vol. 79(4), pages 774-800, September.
    5. Moore, William J & Newman, Robert J, 1975. "On the Prospects for American Trade Union Growth: A Cross-Section Analysis," The Review of Economics and Statistics, MIT Press, vol. 57(4), pages 435-445, November.
    6. John J. Binder, 1985. "Measuring the Effects of Regulation with Stock Price Data," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 167-183, Summer.
    7. Ruback, Richard S & Zimmerman, Martin B, 1984. "Unionization and Profitability: Evidence from the Capital Market," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1134-1157, December.
    8. Szewczyk, Samuel H. & Tsetsekos, George P., 1992. "State intervention in the market for corporate control : The case of Pennsylvania Senate Bill 1310," Journal of Financial Economics, Elsevier, vol. 31(1), pages 3-23.
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    Cited by:

    1. Yair Kaldor, 2022. "Financialization and Fictitious Capital: The Rise of Financial Securities as a Form of Private Property," Review of Radical Political Economics, Union for Radical Political Economics, vol. 54(2), pages 239-254, June.

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