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The impact of minimum wages on population health: evidence from 24 OECD countries

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Abstract

This study examines the relationship between minimum wages and several measures of population health by analyzing data from 24 OECD countries for a time period of 31 years. Specifically, I test for health effects as a result of within-country variations in the generosity of minimum wages, which are measured by the Kaitz index. The paper finds that higher levels of minimum wages are associated with significant reductions of overall mortality rates as well as in the number of deaths due to outcomes that have been shown to be more prevalent among individuals with low socioeconomic status (e.g., diabetes, disease of the circulatory system, stroke). A 10% point increase of the Kaitz index is associated with significant declines in death rates and an increase in life expectancy of 0.44 years. Furthermore, I provide evidence for potential channels through which minimum wages impact population health by showing that more generous minimum wages impact outcomes such as poverty, the share of the population with unmet medical needs, the number of doctor consultations, tobacco consumption, calorie intake, and the likelihood of people being overweight.

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Notes

  1. Please see the summary of minimum wage-employment studies by Neumark and Wascher [46].

  2. I find that the within-country variation of the Kaitz index is equal to 0.0626, which furthermore suggests that countries changed the level of their minimum wages during the period of the study.

  3. Despite examining 31 years and 24 countries, the sample size in Table 3 is only 381, since only country-year observations are included when a minimum wage was in place (meaning when a Kaitz index is available).

  4. Given that it might be expected that changes in the generosity of the minimum wage could have lagged effects on health outcomes, I also examine the effects on 1-year and 2-year lags. The results remain consistent.

  5. The sample sizes in Table 4 vary due to the number of missing variables in the OECD.Stat dataset for the outcomes being examined.

  6. The results in Table 6 are obtained from separate regressions.

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  1. Department of Marketing and Economics, University of West Florida, 11000 University Pkwy., Bldg. 53/Room 120, Pensacola, FL, 32514, USA

    Otto Lenhart

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Lenhart, O. The impact of minimum wages on population health: evidence from 24 OECD countries. Eur J Health Econ 18, 1031–1039 (2017). https://doi.org/10.1007/s10198-016-0847-5

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