Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 1, 2022 erstellt
Description:
This paper exploits the staggered implementation of state-level paid sick leave (PSL) mandates to assess their real effects on U.S. corporations. We find that employees’ better access to sick pay leads to higher firm productivity and profitability. First, we show that the positive effects on performance are more pronounced for firms with more expensive labor. The results suggest that employees who prefer sick pay to incremental pecuniary compensation will have an incentive to exert more effort, resulting in better firm performance. Second, we show that the generosity of PSL boosts firm performance by improving employee health. To this end, we find that the performance improvement mainly concentrates on firms in industries which tend to require physical presence in the workplace. Moreover, our main results are largely driven by firms headquartered in counties with higher social capital, which are less prone to moral hazard stemming from PSL. Finally, additional tests reveal that the increased PSL coverage is associated with greater firm value and higher leverage. Overall, our paper demonstrates a Pareto improvement resulting from the provision of fringe benefits, and it contributes to the recent debate on the effectiveness and efficacy of PSL during the COVID-19 crisis