Examining the Effect of Wrongful Discharge Laws on Women's Occupational Employment

ABSTRACT Previous empirical literature on US wrongful discharge laws, a judicial form of employment protection, has identified ways in which these policies have changed employers' hiring and firing practices, but has lacked a systematic analysis of the impact on workplace gender composition. This paper is the first to investigate the impact of state adoption of wrongful discharge laws on occupational gender diversity within American workplaces. We use restricted establishment‐level longitudinal data that are uniquely suited for the analysis of this topic obtained from the United States. Equal Employment Opportunity Commission (EEO‐1 Employer Information Reports). We utilize difference‐in‐differences regression methodology to first estimate the overall impact of wrongful discharge laws, and then examine the dynamics of wrongful discharge law impacts using event study regressions. We then examine the interplay between state wrongful discharge laws and state gender employment discrimination laws in shaping female employment composition at workplaces. First, we find that the adoption of one wrongful discharge law in particular, the good faith doctrine, is associated with an increase in women's employment share in laborer jobs within private‐sector establishments of 0.80 percentage points, and that this is a causal impact given the pattern of yearly impacts found using our event study analysis. Our findings suggest that the good faith doctrine has facilitated reduction in barriers women have historically faced in blue‐collar jobs. Second, while we find that the good faith doctrine is associated with a statistically significant increase in the share of women in officer and managerial jobs, and that the public policy doctrine is associated with a significant rise in women's share of professional jobs, our event study results cast doubt that these are causal impacts. Finally, our exploration of the interaction between state wrongful discharge laws and state gender discrimination laws reveals that, generally, state gender discrimination laws neither amplify nor diminish the impact of wrongful discharge laws on women's occupational employment within establishments.