The Impact of Paid Family Leave on Families with Health Shocks

This paper analyzes the impact of paid family leave (PFL) policies in California, New Jersey, and New York on the labor market and mental health outcomes of individuals whose spouses or children experience health shocks. We use data from the restricted-use version of the Medical Expenditure Panel Survey (MEPS) over years 1996–2019, which allows us to observe individuals’ states of residence, employment status, and the precise timing of their spouses’ and children’s hospitalizations and surgeries (our health shock measures). We use diﬀerence-in-diﬀerence and event-study models to compare the dif-ferences in post-health-shock labor market and mental health outcomes between spouses and parents surveyed before and after PFL implementation relative to the analogous diﬀerences among those in states that did not implement PFL over our analysis time period. We ﬁnd that the (healthy) wives of individuals with medical conditions or limitations who experience a hospitalization or a surgery are 7.0 percentage points less likely to report “leaving a job to care for home or family” in the post-health-shock rounds of the data. These women also experience improved mental health, measured based on both self-reports and the use of mental health-related prescription drugs. We ﬁnd no consistent impacts on the outcomes of men whose spouses have health shocks, or on parents of children with health shocks. 4 We use diﬀerence-in-diﬀerence (DD) and event-study models to compare the diﬀerences in post-health-shock labor market and mental health outcomes between spouses and parents surveyed before and after PFL implementation relative to the analogous diﬀerences among those in states that did not experience a change in PFL availability over the analysis time period. 5 Our regressions include controls for individual and family characteristics, as well as state and year ﬁxed eﬀects. 6