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UNITED STATES DEPARTMENT OF LABOR

Feminist firms (Bennett, Stern & Wang 2019)

Review Guidelines

Causal Evidence Guidelines

Absence of conflict of interest.

Citation

Bennett, B., Erel, I., Stern, L., & Wang, Z. (2019). Feminist firms. Ohio State University, Fisher College of Business Research Paper Series.

Highlights

  • The study's objective was to examine the impact of state Paid Family Leave laws on employee turnover. 

  • The study conducted a difference-in-difference analysis. The study used firm-level data from Compustat, a database with financial and accounting information on companies. The authors compared employee turnover outcomes of firms in states who had implemented Paid Family Leave laws to firms in states who did not through statistical analysis. 

  • The study found a positive statistically significant relationship between Paid Family Leave laws and reduced employee turnover.   

  • The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before the intervention or include sufficient control variables to account for the characteristics of each firm. This means we are not confident that the estimated effects are attributable to Paid Family Leave; other factors are likely to have contributed.  

Intervention Examined

State Paid Family Leave (PFL) Laws

Features of the Intervention

State Paid Family Leave (PFL) laws require firms to provide paid leave for certain medical or family events to employees who work in the state. PFL laws that provide between four and twelve weeks of paid leave were enacted in California, Massachusetts, New Jersey, New York, Rhode Island, Washington and the District of Columbia between 2002 and 2018. As of the study date, PFL was in effect in only four of the states (CA, NJ, RI, and NY).

Features of the Study

The study conducted a difference-in-difference analysis. The study used firm-level financial and accounting data from 74,191 firms on employee turnover from 2004-2018. The statistical analysis compared firms headquartered in states that implemented PFL in that time frame (the intervention group) to firms headquartered in states that had not yet adopted PFL (the comparison group).  

Findings

Employment

  • The study found a positive statistically significant relationship between Paid Family Leave laws and reduced employee turnover.   

Considerations for Interpreting the Findings

The authors accounted for some preexisting differences between the groups before the intervention (e.g.- cash and debts). However, the authors did not specify if they accounted for other factors that could have affected the difference between the treatment and comparison firms such as firm size, firm sector, changes in group composition or a pre-intervention measure on the outcome of interest. These differences between the groups—and not Paid Family Leave laws—could explain the observed differences in outcomes. 

In addition, the definition of the outcome should be noted. Employee Turnover in this study refers to a financial calculation of the percent of stock options cancelled scaled by the total options outstanding. 

Causal Evidence Rating

The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before the intervention or include sufficient control variables. This means we are not confident that the estimated effects are attributable to Paid Family Leave; other factors are likely to have contributed.

Reviewed by CLEAR

February 2022