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Did Right-to-Work Laws Impact Income Inequality? Evidence from US States Using the Synthetic Control Method

March 17, 2016
By Jeffrey Jordan, Aparna Mathur, Abdul Manasib, and Devesh Roy

There is an ongoing debate about the effect of changes in labor regulations such as Right-to-Work (RTW) laws on rising income inequality in the U.S.

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There is an ongoing debate about the effect of changes in labor regulations such as Right-to-Work (RTW) laws on rising income inequality in the U.S. In this paper, we use a relatively new methodology, the Synthetic Control Method – which we argue is more suitable for analyzing this data – to examine the impact of a state’s adoption of an RTW law on income inequality. We use a wide range of inequality measures for states that enacted their RTW laws between the 1960s and the 2000s. Unlike some earlier papers that suggest a negative link between the RTW laws and correlates of inequality such as wages, we find that RTW laws had no significant impact on income inequality in these states.