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Can employee welfare policies insure workers against fluctuations in employment?

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  • Loncan, Tiago

Abstract

We study the effects of employee welfare policies (EWPs) on labor investments of U.S. firms. We show that EWPs are associated with a significantly weaker pass-through of industry sales shocks to firm employment growth. EWPs’ insulation effect is stronger in states with less generous unemployment insurance, in states with lower wage growth, and in firms relying more on qualified labor. We corroborate our results exploring policy-induced variation in workforce policies from the adoption of Paid Sick Leave laws, and industry-wide shocks to labor ESG incidents. Our findings suggest that EWPs may insure workers against employment fluctuations.

Suggested Citation

  • Loncan, Tiago, 2025. "Can employee welfare policies insure workers against fluctuations in employment?," Journal of Corporate Finance, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:corfin:v:94:y:2025:i:c:s0929119925001178
    DOI: 10.1016/j.jcorpfin.2025.102849
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    Keywords

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    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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