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International Journal of Health Economics and Management

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01-12-2018 | Research Article

The impact of the minimum wage on health

Authors: Elena Andreyeva, Benjamin Ukert

Published in: International Journal of Health Economics and Management | Issue 4/2018

Abstract

This study evaluates the effect of minimum wage on risky health behaviors, healthcare access, and self-reported health. We use data from the 1993–2015 Behavioral Risk Factor Surveillance System, and employ a difference-in-differences strategy that utilizes time variation in new minimum wage laws across U.S. states. Results suggest that the minimum wage increases the probability of being obese and decreases daily fruit and vegetable intake, but also decreases days with functional limitations while having no impact on healthcare access. Subsample analyses reveal that the increase in weight and decrease in fruit and vegetable intake are driven by the older population, married, and whites. The improvement in self-reported health is especially strong among non-whites, females, and married.

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There is a broad literature on the effects of other sources of income on health that documents that income shocks can improve health (Lindahl 2005; Frijters et al. 2005), increase weight (Au and Johnston 2015; Deb et al 2011; Schmeiser 2009), reduce smoking (Averett and Wang 2013; Apouey and Clark 2015), and increase drinking (Apouey and Clark 2015; Cowan and White 2015).

Beginning in 1996 all states participated in the BRFSS. In earlier years, information is missing for Wyoming in 1993, the District of Columbia in 1995, and Rhode Island in 1994.

The BLS reports the minimum wage information as of January in each year.

We calculate BMI based on self-reported information of weight and height. These measures are well-known to suffer from measurement error potentially introducing bias. Several studies that adjust BMI using a correction method and validated data from the National Health and Nutrition Examination Survey have shown that the measurement error does not affect the coefficient estimates (Cawley 2004; Courtemanche et al. 2015).

Even though the evidence on the impact of the Medicaid expansions is mixed (Simon et al. 2017; Courtemanche et al. 2017), we believe it may be a potential confounder because states with Medicaid expansions were also more likely to increase the minimum wage during that timeframe.

We have also implemented a triple difference estimator that defines the treated group as an interaction of the minimum wage with individuals educated up to a high school degree. The comparison group are individuals with a college degree. The results are similar to those presented in Table 3.

Probit estimates and estimates without weights produce similar results.

We have also estimated the impact of the relative minimum wage dividing the minimum wage by the median hourly wage. These estimates are similar to the ones presented in Table 6.

An additional part of their criticism has to do with the choice of the sample period, but their main critique in panel with many time periods relates potential changes in the underlying state trends that could in the longer term bias the estimates. Given this potential for bias, Neumark et al. (2014) recommend the use of higher-order trends in panel data models.

We also performed all robustness checks for the subsample results. Overall, the finding confirm the estimates presented in Table 5.

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Title: The impact of the minimum wage on health
Authors: Elena Andreyeva
Benjamin Ukert
Publication date: 01-12-2018
Publisher: Springer US
Published in: International Journal of Health Economics and Management / Issue 4/2018
Print ISSN: 2199-9023
Electronic ISSN: 2199-9031
DOI: https://doi.org/10.1007/s10754-018-9237-0

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The impact of the minimum wage on health

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