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Right-to-Work Laws and the Extent of Unionization

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  • Henry S. Farber
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    Abstract

    It is a well known fact that the extent of unionization is lower in states with Right-to-Work (RTW) laws. A framework is developed for determining whether RTW laws actually cause a decrease in the extent of unionization or whether they simply mirror preexisting tastes of workers against unions. A set of empirical tests is proposed that can distinguish between these explanations based on differences between RTW and non-RTW states in the demand for union representation, the supply of union jobs relative to that demand, and the observed union-nonunion wage differential. Data from the Quality of Employment Survey and from the Current Population Survey are utilized to implement the tests.The results indicate that the demand for union representation is significantly lower in states with RTW laws.At the same time no significant difference is found on the basis of RTW laws in the supply of union jobs relative to demand. It is also found that the observed union-nonunion wage differential is slightly larger in RTW states.This pattern is consistent with the hypothesis that RTW laws simply mirror preexisting preferences against union representation. In its entirety it is not consistent with the hypothesis that RTW laws cause a decrease in the extent of unionization.A final interesting result is that it is found that the extent of unionization in the south is lower even after controlling for the presence of RTW laws in many of the states in that region. Further, it is determined that this is due to a supply of union jobs in the south that is more constrained relative to demand than elsewhere. This suggests that there exist a set of institutional or economic factors in the souththat makes union organizing more difficult and expensive independent of the existence of RTW laws.

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    File URL: http://www.nber.org/papers/w1136.pdf
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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1136.

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    Date of creation: Jun 1983
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    Publication status: published as Farber, Henry S. "Right-to-Work Laws and the Extent of Unionization." Journal of Labor Economics, Vol. 2, No. 3, (July 1984), pp. 319-352.
    Handle: RePEc:nbr:nberwo:1136

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    Cited by:
    1. Jaime Saavedra-Chanduví & Máximo Torero, 2002. "Union Density Changes and Union Effects on Firm Performance in Peru," IDB Publications 43218, Inter-American Development Bank.
    2. W. Robert Reed, 2003. "How Right-To-Work Laws Affect Wages," Journal of Labor Research, Transaction Publishers, vol. 24(4), pages 713-730, October.
    3. Arturo, Ramirez Verdugo, 2004. "Dividend Signaling and Unions," MPRA Paper 2273, University Library of Munich, Germany, revised 04 Oct 2006.
    4. Rosenzweig, Mark R. & Wolpin, Kenneth I., 1984. "Migration Selectivity and the Effects of Public Programs," Bulletins 8442, University of Minnesota, Economic Development Center.
    5. Joseph Tracy, 1988. "Comparisons Between Public and Private Sector Union Wage Differentials: Does the Legal Environment Matter?," NBER Working Papers 2755, National Bureau of Economic Research, Inc.
    6. Henry S. Farber, 1987. "The Evolution of Public Sector Bargaining Laws," NBER Working Papers 2361, National Bureau of Economic Research, Inc.
    7. William T. Dickens & Lawrence F. Katz, 1987. "Inter-Industry Wage Differences and Theories of Wage Determination," NBER Working Papers 2271, National Bureau of Economic Research, Inc.
    8. Xiaoyang Li, 2012. "Workers, Unions, and Takeovers," Journal of Labor Research, Springer, vol. 33(4), pages 443-460, December.
    9. Gundlach, Erich & Schmidt, Klaus-Dieter, 1985. "Das amerikanische Beschäftigungswunder: Was sich daraus lernen läßt," Kiel Discussion Papers 109, Kiel Institute for the World Economy (IfW).
    10. Silke Januszewski Forbes & Mara Lederman, 2009. "Adaptation and Vertical Integration in the Airline Industry," American Economic Review, American Economic Association, vol. 99(5), pages 1831-49, December.

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