Family Friendly: How Are Firms and Establishments Affected by State Paid Family Leave Programs?

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Most workers experience parenthood at some point during their work careers. Studies show that gender gaps in career outcomes increase particularly rapidly during the years of family formation. Provision of paid parental leave to help employees meet both work and family responsibilities is usually advocated as the policy response. However, little is known about how paid parental leave affects employers particularly how these impacts differ by firm type. This project studies the effects of state-level paid family leave on U.S. firms and establishments using a unique and novel large-scale employer-household data set. The results will show how family decision-making interacts with state-level policy, and how this process affects the operation and success of companies. These findings which informs the ongoing policy debate on paid leave in the United States more broadly and how public policies affect business decisions. The research will therefore improve the bell-being of firms and households, hence improve the living standards of Americans. This research will construct a complex, large-scale database to analyze the impact of state-level paid leave on U.S. firms and establishments. We utilize the fact that paid leave policies have been implemented in some states (CA, NJ, and RI), but not others, while large firms have establishments in both paid-leave states and non-paid leave states. This ?natural experiment? facilitates a causal analysis using a differences-in-differences approach. The analyses are based on the Longitudinal Employer-Household Dynamics (LEHD) database that will be linked to other firm- and establishment level data sources. Together, the data contain rich information on establishment and firm level outcomes such as employee turnover, workforce composition, establishment survival and growth, labor productivity, and sales revenue. Obtaining causal estimates for the impact of paid leave policies on these firm outcomes can significantly contribute to the social and policy debate around the paid leave issues. The results show how public policy interacts with business decisions to improve the livings standards of U.S. citizens.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.