Paid Sick Leave Mandates and Household Portfolio Choice

Yibing Wang, Steven Ongena, Duc Duy Nguyen and Tarik Driouchi
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Yibing Wang: King's College London
Duc Duy Nguyen: Durham University
Tarik Driouchi: King’s College London

No 25-21, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Using the staggered adoption of paid sick leave (PSL) mandates across US states, we document a 20% increase in the average household stock market participation following the enactment of a PSL policy. The effects are more pronounced among households facing greater health concerns, higher employment risks, and deeper financial vulnerabilities. Several mechanisms can explain our findings. PSL mandates offer households insurance-like protection, increase their income and wealth, and improve households' future outlook. Our findings demonstrate that PSL laws create positive economic externalities by motivating households to invest in risky assets, a key factor toward building wealth.

Keywords: Paid sick leave; Household finance; Stock market participation; Social insurance; Financial health (search for similar items in EconPapers)
JEL-codes: G51 I18 J22 J32 M5 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2025-02
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2521

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