Do Anti-Union Policies Increase Inequality? Evidence from State Adoption of Right-to-Work Laws

Abstract

The distribution of income lies at the intersection of states and markets, both influencing and responding to government policy. Reflecting this reality, increasing research focuses on the political origins of inequality in the United States. However, the literature largely assumes—rather than tests—the political mechanisms thought to affect the income gap. This study provides a timely reassessment of one such mechanism. Leveraging variation in labor laws between states and differences in the timing of adoption of right-to-work (RTW) legislation, I examine one political mechanism blamed by many for contributing to inequality. Using a variety of panel designs, I find little evidence that RTW laws have been a major cause of growing income inequality, pointing to the importance of grounding theoretical arguments about the interrelationships between states and markets in a sound empirical reality.