The impacts of U.S. right‐to‐work laws on free riding, unionization, and compensation

Abstract

Abstract Right‐to‐work (RTW) laws are theorized to precipitate union decline by inducing free riding among union‐covered workers; however, this relationship has not been empirically explored. This paper uses recent policy variation and Current Population Survey (CPS) data to identify the impact of state RTW laws on union status (free riding, membership, and coverage), wages, and benefits among private and public sector workers. Doubly robust difference‐in‐difference estimates suggest RTW laws are associated with substantial increases in free riding, decreases in union membership, and decreases in union coverage. Thus, RTW laws weaken unions through combinations of increased free riding and decreased coverage, though effects vary by state and sector. While RTW laws are not associated with changes in wage differentials, state fixed effects estimates suggest that unions provide some excludable advantages to members in the face of RTW legislation, through higher earnings (union wage premium) and fringe benefits (union benefit premium).