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Paid Sick Leave Mandates and Household Portfolio Choice

Author

Listed:
  • Yibing Wang

    (King's College London)

  • Steven Ongena

    (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR))

  • Duc Duy Nguyen

    (Durham University)

  • Tarik Driouchi

    (King’s College London)

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.

Suggested Citation

  • Yibing Wang & Steven Ongena & Duc Duy Nguyen & Tarik Driouchi, 2025. "Paid Sick Leave Mandates and Household Portfolio Choice," Swiss Finance Institute Research Paper Series 25-21, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2521
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5153691
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    More about this item

    Keywords

    Paid sick leave; Household finance; Stock market participation; Social insurance; Financial health;
    All these keywords.

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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