Political Attitudes and Equity Market Reactions to Vaccine Mandate Bans
74 Pages Posted: 28 Mar 2023 Last revised: 1 Feb 2024
Date Written: March 18, 2023
Abstract
We study equity market reactions to states laws banning COVID-19 vaccine mandates and find a 0.64% increase in abnormal returns to affected firms around law passage, compared to unaffected firms. The positive market reaction concentrates in firms with a Republican workforce, especially if they face tight local labor markets or have Democratic leadership. Firms with a Democratic workforce experience mildly negative market reactions, especially in tight labor markets. Establishments impacted by bans experience greater employment growth after the passage of the bans. Our findings suggest that regulations aligned with workers’ preferences may ameliorate labor adjustment costs to benefit firm value.
Keywords: Non-monetary Preferences, Cultural friction, Labor Adjustment Cost, Return-to-work
JEL Classification: G38, J18, J32
Suggested Citation: Suggested Citation