The impact of the UK National Minimum Wage on mental health

Abstract

Despite an emerging literature, there is still sparse and mixed evidence on the wider societal benefits of Minimum Wage policies, including their effects on mental health. Furthermore, causal evidence on the relationship between earnings and mental health is limited. We focus on low-wage earners, who are at higher risk of psychological distress, and exploit the quasi-experiment provided by the introduction of the UK National Minimum Wage (NMW) to identify the causal impact of wage increases on mental health. We employ difference-in-differences models and find that the introduction of the UK NMW had no effect on mental health. Our estimates do not appear to support earlier findings which indicate that minimum wages affect mental health of low-wage earners. A series of robustness checks accounting for measurement error, as well as treatment and control group composition, confirm our main results. Overall, our findings suggest that policies aimed at improving the mental health of low-wage earners should either consider the non-wage characteristics of employment or potentially larger wage increases.

Higher Wages, Less Gym Time? The Effects of Minimum Wages on Time Use

“…Adams et al () report increases in alcohol‐related traffic fatalities among teens, while Sabia et al (2019) find no evidence for increases in alcohol consumption for this age group when expanding the sample period. In contrast to Reeves et al (), Kronenberg et al () find that the first nationwide minimum wage in the United Kingdom did not lead to improvements in mental health outcomes.…”

The effects of minimum wages on the health of working teenagers

“…Kronenberg, Jacobs, and Zucchelli (2015) find no significant health effects while Reeves et al (2014, 2016) find that the increase led to improved mental health. Lenhart (2015) reports improved selfreported health.…”

The Minimum Wage and Infant Mortality

“…Despite this, using a larger sample size and alternative control groups, Kronenberg et al (2017) did not find a statistical association between the introduction of a national minimum wage and improvements in mental health.…”

“…For studying single and continuous minimum wage treatments such as the introduction of the 1999 national minimum wage in the UK, the standard Difference-in-Difference (DID) model has been used. (Kronenberg et al, 2017;Lenhart, 2017;Reeves et al, 2017) In a balanced panel setting with a single treatment, the TFE and DID are identical.…”

“…(Averett et al, 2016;Bullinger, 2017;Du and Leigh, 2018;Komro et al, 2016;Lenhart, 2016Lenhart, , 2017Reeves et al, 2017) While some studies have found empirical evidence to suggest that a minimum wage is associated with improvements in health, other studies have found the opposite (or have found no relationship between the two). (Adams et al, 2012;Cottie and Tefft, 2013;Hoke and Cottie, 2016;Horn et al, 2017;Kronenberg et al, 2017;Majid et al, 2016) Interests in studying the minimum wage as a potential public health policy tool is based on three factors. First, minimum wage laws have been shown to exhibit higher compliance rates than other labor market regulations.…”