Positive Health Externalities of Mandating Paid Sick Leave

A growing economic literature studies the optimal design of social insurance systems and the empirical identification of welfare‐relevant externalities. In this paper, we test whether mandating employee access to paid sick leave has reduced influenza‐like‐illness (ILI) transmission rates as well as pneumonia and influenza (P&I) mortality rates in the United States. Using uniquely compiled data from administrative sources at the state‐week level from 2010 to 2018 along with difference‐in‐differences methods, we present quasi‐experimental evidence that sick pay mandates have causally reduced doctor‐certified ILI rates at the population level. On average, ILI rates fell by about 11 percent or 290 ILI cases per 100,000 patients per week in the first year.