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Right‐to‐Work Laws and Firm Productivity in U.S. Firms

Author

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  • Mohamed Shaker Ahmed
  • Charilaos Mertzanis

Abstract

We investigate the impact of Right‐to‐Work (RTW) laws on firm‐level total factor productivity (TFP) in U.S. firms. We find that RTW laws, which reduce union bargaining power, are associated with a decrease in firm‐level TFP, particularly for firms adopting innovation‐driven strategies or facing financial constraints. These effects are robust across various models and endogeneity treatments, emphasising the importance of internal and external factors in assessing labour policy impacts. Weakening labour protection and limiting union influence may reduce worker engagement, weaken bargaining power, and ultimately hinder productivity. The study contributes to the literature by empirically linking RTW adoption with TFP and expanding the discussion on labour market policies as determinants of productivity. It also highlights the roles of business strategy, market dynamism, and financial constraints in mitigating the corporate effects of RTW laws. The research provides insights for policymakers and business leaders, emphasising the need for balanced labour market policies that support both corporate flexibility and worker engagement to sustain productivity.

Suggested Citation

  • Mohamed Shaker Ahmed & Charilaos Mertzanis, 2025. "Right‐to‐Work Laws and Firm Productivity in U.S. Firms," Industrial Relations Journal, Wiley Blackwell, vol. 56(4), pages 301-321, July.
    • Handle: RePEc:bla:indrel:v:56:y:2025:i:4:p:301-321
    DOI: 10.1111/irj.12468
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