The role of paid family leave in labor supply responses to a spouse's disability or health shock

Abstract

Disability onset and major health shocks can affect the labor supply of those experiencing the event and their family members, who face a tradeoff between time spent earning income and providing care. This decision could be affected by the availability of paid family leave. We examine the role of paid leave mandates in caregiving and labor supply decisions after a spouse's disability or health shock. Using data from the Survey of Income and Program Participation, we show that paid leave mandates reduce the likelihood that potential caregivers report decreasing their paid work hours to provide caregiving after a spouse's health shock. However, if caregivers are unlikely to have access to job protection, paid leave mandates also increase the likelihood of leaving the labor market to provide caregiving and working fewer weeks. There is limited evidence of an effect of paid leave on other employment outcomes. Our findings demonstrate that paid leave has some influence on household labor supply decisions after spousal health shocks, but its role should be considered together with the availability of job protection.