The impact of a wage increase on mental health:: Evidence from the UK minimum wage

Christoph Kronenberg; Rowena Jacobs; Eugenio Zucchelli

The impact of a wage increase on mental health: Evidence from the UK minimum wage

Christoph Kronenberg, Rowena Jacobs, Eugenio Zucchelli

Research output: Working paper

Abstract

Previous studies on the relationship between income and mental health focus on lottery winners and find that positive income shocks may improve mental health. We focus on low-wage earners, who have a higher propensity of experiencing mental health problems, and exploit the policy experiment provided by
the introduction of the 1999 UK minimum wage to identify the impact of a wage increase on mental health. Combining matching techniques with a series of difference-in-differences models we find that the minimum wage had only limited short-run effects on the mental health of those affected by the minimum wage. Our estimates do not appear to support earlier findings that indicate that monetary shocks improve an individual’s mental health. Several robustness checks controlling for measurement error and treatment and control group composition appear to confirm our main results. Our findings suggest that policies aimed at improving the mental health of low-wage earners should consider either the non-wage characteristics of employment or larger wage increases.

Original language	English
Publisher	HEDG, DERS, University of York
Pages	1-27
Number of pages	27
Publication status	Published - Aug 2015

Publication series

Name	HEDG WP

Bibliographical note

WP 15/08

Keywords

Minimum Wage
Mental Health
Policy Evaluation
BHPS

Access to Document

http://www.york.ac.uk/media/economics/documents/hedg/workingpapers/1508.pdf

Cite this

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title = "The impact of a wage increase on mental health:: Evidence from the UK minimum wage",

abstract = "Previous studies on the relationship between income and mental health focus on lottery winners and find that positive income shocks may improve mental health. We focus on low-wage earners, who have a higher propensity of experiencing mental health problems, and exploit the policy experiment provided bythe introduction of the 1999 UK minimum wage to identify the impact of a wage increase on mental health. Combining matching techniques with a series of difference-in-differences models we find that the minimum wage had only limited short-run effects on the mental health of those affected by the minimum wage. Our estimates do not appear to support earlier findings that indicate that monetary shocks improve an individual{\textquoteright}s mental health. Several robustness checks controlling for measurement error and treatment and control group composition appear to confirm our main results. Our findings suggest that policies aimed at improving the mental health of low-wage earners should consider either the non-wage characteristics of employment or larger wage increases.",

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