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The impact of paid sick leave laws on consumer and business bankruptcies

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  • Michelle M. Miller

Abstract

This paper examines how missed income due to illness impacts household fragility. Specifically, it shows that paid sick leave laws, which provide households insurance against illness‐related income shocks, reduce consumer bankruptcy. Using a panel dataset at the county‐quarter level, this paper exploits the geographic and temporal variation in the adoption of paid sick leave laws to implement a difference‐in‐differences and event study analysis. It finds that paid sick leave laws reduce consumer bankruptcy filings by approximately 11%; this effect is seen within three quarters of the law's implementation and remains constant in magnitude and significance thereafter. As paid sick leave laws may come at a cost to businesses, this paper also examines the impact of such laws on business bankruptcy filings—it shows that paid sick leave laws have little to no impact on business bankruptcy filings.

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  • Michelle M. Miller, 2022. "The impact of paid sick leave laws on consumer and business bankruptcies," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 19(4), pages 844-896, December.
    • Handle: RePEc:wly:empleg:v:19:y:2022:i:4:p:844-896
    DOI: 10.1111/jels.12329
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    Cited by:

    1. Johanna Catherine Maclean & Sabrina Wulff Pabilonia, 2024. "Paid Sick Leave and Childcare," NBER Working Papers 32710, National Bureau of Economic Research, Inc.
    2. Xiuming Dong & Johanna Catherine Maclean & David Powell, 2024. "Social Insurance Spillovers: Evidence From Paid Sick Leave Mandates and Workers' Compensation," NBER Working Papers 32751, National Bureau of Economic Research, Inc.
    3. Pichler, Stefan & Ziebarth, Nicolas R., 2024. "Sick Leave and Medical Leave in the United States: A Categorization and Recent Trends," IZA Policy Papers 206, Institute of Labor Economics (IZA).

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