The Effect of State Policies on the Location of Manufacturing: Evidence from State Borders

Abstract

This paper provides new evidence that state policies play a role in the location of industry. The paper classifies a state as probusiness if it has a right‐to‐work law and antibusiness if it does not. The paper finds that, on average, there is a large, abrupt increase in manufacturing activity when one crosses a state border from an antibusiness state into a probusiness state.