Paid Leave Pays Off: The Effects of Paid Family Leave on Firm Performance

67 Pages Posted: 22 Nov 2019 Last revised: 12 Jan 2021

See all articles by Benjamin Bennett

Benjamin Bennett

Tulane University - A.B. Freeman School of Business

Isil Erel

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Lea Henny Stern

University of Washington - Michael G. Foster School of Business

Zexi Wang

Lancaster University

Multiple version iconThere are 2 versions of this paper

Date Written: December 25, 2020

Abstract

We explore how lowering labor market frictions for female workers affects corporate performance. Using the staggered adoption of state-level Paid Family Leave acts, we provide causal evidence on the value created by relieving frictions to accessing female talent, for private and public firms. Reduced turnover and an increase in female leadership are potential mechanisms that contribute to performance gains. Across specifications, our estimates indicate that treated establishments’ productivity increases by about 5% relative to neighbor control establishments. The treatment effect is larger when workers are in less religious counties and in those with more women of childbearing age.

Keywords: PFL, Labor Force Participation, Gender, Diversity, Talent Allocation, Firm Performance

JEL Classification: J16, J22, J24, J32, J78, M14, M51

Suggested Citation

Bennett, Benjamin and Erel, Isil and Stern, Lea Henny and Wang, Zexi, Paid Leave Pays Off: The Effects of Paid Family Leave on Firm Performance (December 25, 2020). Fisher College of Business Working Paper No. 2019-03-029, Charles A. Dice Center Working Paper No. 2019-29, European Corporate Governance Institute – Finance Working Paper No. 643/2019, Available at SSRN: https://ssrn.com/abstract=3490645 or http://dx.doi.org/10.2139/ssrn.3490645

Benjamin Bennett (Contact Author)

Tulane University - A.B. Freeman School of Business ( email )

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HOME PAGE: https://sites.google.com/site/benjaminbennettfinance/home

Isil Erel

Ohio State University (OSU) - Department of Finance ( email )

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Columbus, OH 43210-1144
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National Bureau of Economic Research (NBER) ( email )

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European Corporate Governance Institute (ECGI) ( email )

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Lea Henny Stern

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

Zexi Wang

Lancaster University ( email )

Lancaster University Management School
Bailrigg
Lancaster, LA1 4YX
United Kingdom

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