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Do right-to-work laws reduce financial constraints of firms? Evidence from Michigan and Indiana companies

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  • Vijay Gondhalekar
  • Landon Klausing
  • Christopher Harper

Abstract

This study examines financial constraints of Michigan and Indiana firms before and after the two states enacted Right-to-Work laws in 2012 relative to those in states with and without RTW laws as separate control groups. Findings based on difference-in-difference regressions indicate that, on average, financial constraints of Michigan and Indiana firms were significantly higher than those in both the control groups before the RTW laws were enacted, but the constraints declined significantly after the laws were enacted not only relative to the pre-enactment levels but also relative to those of companies in both the control groups.

Suggested Citation

  • Vijay Gondhalekar & Landon Klausing & Christopher Harper, 2023. "Do right-to-work laws reduce financial constraints of firms? Evidence from Michigan and Indiana companies," Applied Economics Letters, Taylor & Francis Journals, vol. 30(6), pages 757-760, March.
    • Handle: RePEc:taf:apeclt:v:30:y:2023:i:6:p:757-760
    DOI: 10.1080/13504851.2021.2017399
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