Paid Leave Pays Off: The Effects of Paid Family Leave on Firm Performance

Paid Leave Pays Off: The Effects of Paid Family Leave on Firm Performance

Benjamin Bennett, Isil Erel, Léa H. Stern, Zexi Wang

Series number :

Serial Number: 
643/2019

Date posted :

December 04 2019

Last revised :

March 30 2023
SSRN Share

Keywords

  • Paid Family Leave • 
  • Labor Force Participation • 
  • Gender • 
  • diversity • 
  • Talent Allocation • 
  • Firm performance

Using the staggered adoption of US state-level Paid Family Leave (PFL) acts, we find that lowering labor market frictions for female workers leads to reduced employee turnover and profitability gains for private and publicly-traded firms.

Relying on recent advances in econometric theory of staggered difference-in-differences analysis, we ensure this finding holds when correcting for the bias arising from staggered adoption. Following the introduction of state-level PFL, productivity increases by about 5% in treated establishments, relative to control establishments in adjacent counties on the other side of the state border. We document heterogeneous treatment effects consistent with our identity-based framework.

Authors

Real name:
Benjamin Bennett
Real name:
Léa H. Stern
Real name:
Zexi Wang