Right-to-Work Laws and Geographic Differences in Living Costs: An Analysis of Effects of the "Union Shop" Ban for the Years 1974, 1976, and 1978

The existence in a geographic area of right-to-work laws prohib­iting the union shop tends to generate a labor-market environment with less union power and thus less labor-market pressure to elevate labor costs. To the extent that right-to-work legislation leads to lower labor costs and hence to lower unit production costs, there is a tendency for the overall cost of living in the area to be lower. Using ordinary least squares, this paper examines this hypothesis for the years 1974, 1976, and 1978 for some 38 metropolitan areas in the United States. In a variety of different empirical models, this study generates very strong support for this right-to-work law/living-cost relationship.