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Economic Effects of Right to Work Laws

March 1, 1981
By Walter J. Wessels

This study, written by North Carolina State University economics professor Walter Wessels, examines the effects of right to work (RTW) laws on the labor economy.

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This study, written by North Carolina State University economics professor Walter Wessels, examines the effects of right to work (RTW) laws on the labor economy.

Using data from the Bureau of Labor Statistics, Wessels calculates the effects of workplace freedom on worker wages and other labor factors by reducing inherent bias in previous studies.

“One source of bias stems from ignoring the simultaneous interrelationship between wages, union membership, and the existence of a RTW law,” he writes. “Thus, a simple regression on wages that shows that RTW laws are negatively correlated with wages may simply mean that low wage states are more likely to have a RTW law instead of the typical conclusion that RTW laws result in lower wages. Similarly, a simple regression showing RTW laws negatively correlated with union membership may result from the fact that highly unionized states are less likely to have a RTW law rather than implying that RTW laws reduce union membership.”

RTW laws, he found, do not negatively affect union members in any of the measured ways.

“The general results showed that the effects of RTW laws appear to be insignificant, with no negative effects on wages, union membership, or union problems,” Wessels writes. “On the other hand, RTW laws do have a significant and positive effect on job satisfaction, particularly for non-union workers.”

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Economy Taxes