The Effect of Paid Sick Leave Mandates on Access to Paid Leave and Work Absences

The United States is one of only two OECD countries with no federal mandate guaranteeing workers access to paid sick leave (PSL). While public opinion polls indicate strong support for mandated PSL benefits, opponents argue that PSL regulations are costly to employers and reduce worker hours by encouraging absenteeism. Unfortunately, evidence to support a causal link between PSL mandates and absenteeism is sparse given that nearly every study of the relationship between PSL access and labor outcomes has analyzed legislation adopted outside the U.S. These foreign laws are largely dissimilar to the proposed and recently enacted U.S. statutes and serve as poor models for the effects of expanded PSL generosity in the U.S.

Our paper adds to a small, but growing literature examining the employment effects of PSL mandates in the U.S. We first establish that PSL mandates lead to economically significant increases in access to paid leave using data from the National Health Interview Survey and the Current Population Survey from 2005 to 2015. Relying on geographic and temporal variation in mandate adoption, we estimate difference-in-differences (DD) models comparing outcomes for those living in counties affected by PSL mandates to those living in counties with no mandate in place. Since workers often have PSL benefits in the absence of a legislative mandate, we refine our analysis by predicting the probability of gaining PSL after a mandate takes effect and using this predicted probability to estimate a triple-differences model comparing within-county changes in work absences after mandate enactment for those with a high probability of gaining coverage to those with a low probability of gaining coverage. This method is an improvement over traditional DD estimates of the effect of PSL mandates that fail to focus on workers targeted by the legislation.

We then turn to estimates of the effect of PSL mandates on illness-related work absences. Our results indicate that workers gaining access to PSL following a mandate exhibit substantial increases in illness-related work absences at both the extensive and intensive margins. However, these absences are largely offset by a reduction in illness-related work absences for populations that traditionally have access to paid leave and are not directly affected by the enactment of a mandate. This finding supports the notion that access to PSL lowers rates of presenteeism for those gaining coverage, limiting the spread of communicable illnesses, and resulting in fewer illness-related work absences for others.

These results have significant implications for the current debate over the expansion of PSL benefits to workers in the U.S. While the direct cost to employers of providing paid leave may be large, we show that increased access to PSL generates positive spillovers that act to offset these direct costs and have the potential to improve the health of the workforce.