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Political Attitudes and Equity Market Reactions to Vaccine Mandate Bans

Jun 9, 2023 11:00 am - 12:30 pm AEST

The University of Sydney

Abstract

In 2021, many firms began considering and implementing vaccine mandates as a means to return workers to in-person work. In response, twelve states enacted laws banning employer COVID-19 vaccine mandates. We study equity market reactions to these bans and find a 0.64 percentage point increase in cumulative abnormal returns to affected firms over a three-day window when the bans are signed into law, compared to unaffected firms. The positive market reaction concentrates in firms in Republican-leaning counties, especially if they face a tight local labor market, and in firms with Democratic leadership but Republican workforce. Overall, our findings highlight the importance of worker’s nonmonetary preferences on labor-related outcomes and suggest that regulations aligned with workers ‘preferences could relieve firms from potential labor adjustment costs.

Yihui Pan's Profile