Social Insurance Spillovers: Evidence From Paid Sick Leave Mandates and Workers' Compensation

Xiuming Dong, Johanna Maclean and David Powell

No 32751, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Social insurance programs shield individuals from specific risks, but these programs are not necessarily independent of each other. The existence and scope of one program can potentially influence the use of others, especially when the risks covered by the programs are related. This study investigates the relationship between two mandated benefit programs in the United States: state paid sick leave (PSL) mandates and workers’ compensation. Unlike most developed countries, the U.S. lacks a federal PSL mandate; however, 15 states have implemented such policies. PSL mandates require firms to provide compensated time off for employee health-related needs, while workers’ compensation offers benefits to help workers recover from workplace injuries or illnesses. Using a difference-in-differences analysis, the study explores the impact of state PSL mandates on the usage of workers’ compensation benefits. The findings reveal meaningful spillover effects: when states adopt PSL requirements, there is a decrease in workers’ compensation benefit receipt. While some evidence suggests possible improvements in health, there are no observed reductions in workplace injury rates specifically, indicating that workers may substitute PSL benefits directly for workers’ compensation.

JEL-codes: I18 J28 J32 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-hea and nep-lma
Note: AG EH LE LS PE
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