Exploiting staggered adoptions of US state-level employment protection laws, we provide evidence that employment protection increases the level of stock market participation on both intensive and extensive margins. These effects are stronger for young, low-income, low-wealth, and less-educated households. We observe the opposite financial risk-taking behaviors when the protection law is reversed. Our results are robust to multiple measures of stock market participation and data sets. Our findings imply the significance of employment protection in inducing households to take more financial risks, thereby potentially improving wealth accumulation. This is a new channel through which employment protection could benefit households.