The Impact Of Right-To-Work Laws On Interstate Cost Of Living

Abstract

The impact of right-to-work laws on cost of living differentials is a highly controversial topic due to its possible political implications. This study seeks to investigate the determinants of geographic cost of living in the case of the United States on a state by state basis, focusing on the impact of right-to-work laws. This study hopes to offer some insight into the advantages or disadvantages of a state’s adopting a right-to-work law from the point of the state’s cost of living. It is intuitive that the passage of right-to-work laws dramatically influences the presence of unionized workers, and it has been suggested that the degree of unionization has a direct relationship with the overall cost of living (Cebula and Toma, 2008). After presenting the history, past literature, and legislation relating to the determinants of cost of living and right-to-work laws, this study employs a reduced form estimation methodology along with a multiplicative heteroscedasticity approach to show that right-to-work laws have an impact on the overall cost of living in a state. After analysis of the empirical results it was concluded that right-to-work laws have a negative effect on a state’s cost of living, thus decreasing a state’s cost of living.