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Right‐to‐Work Laws: New Evidence from the Stock Market
Author(s) -
Abraham Steven E.,
Voost Paula B.
Publication year - 2000
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2000.tb00340.x
Subject(s) - shareholder , collective bargaining , right to work , economics , law , empirical examination , empirical evidence , stock (firearms) , work (physics) , state (computer science) , labour economics , political science , corporate governance , actuarial science , finance , mechanical engineering , philosophy , epistemology , algorithm , computer science , engineering
This article is an empirical examination of whether or not stockholder wealth rises in response to passage of a right‐to‐work law—a state law banning union security clauses from collective bargaining agreements. Stockholder wealth rose when Louisiana passed such a law in 1976 and when Idaho did so in 1985‐1986. Presumably this occurred because investors anticipated higher future profits with weaker labor unions or a lower probability of future organization. This is new evidence that such laws are more than symbolic: They hamper labor unions.