William H. Dow, Anna Godøy,
Chris Lowenstein, Michael Reich 07 July 2019
Policymakers and researchers
have sought to understand the causes of and effective policy responses to
recent increases in mortality due to alcohol, drugs, and suicide in the US.
This column examines the role of the minimum wage and the earned income
tax credit – the two most important policy levers for raising incomes for
low-wage workers – as tools to combat these trends. It finds that both
policies significantly reduce non-drug suicides among adults without a college
degree, and that the effect is stronger among women. The findings point to
the role of economic policies as important determinants of health.
Since 2014, overall life
expectancy in the US has fallen for three years in a row, reversing a
century-long trend of steadily declining mortality rates. This decrease in life
expectancy reflects a dramatic increase in deaths from so-called ‘deaths of
despair’ – alcohol, drugs, and suicide – among Americans without a college
degree (Case and Deaton 2015, 2017). Between 1999 and 2017, the age-adjusted rate
of drug overdose deaths increased by 256%, while suicides grew by 33%
(Hedegaard et al. 2017, 2018).
In their pioneering work first
highlighting these trends, Case and Deaton point to declining economic
opportunity among working class non-Hispanic whites – combined with an increase
in chronic pain, social distress, and the deterioration of institutions such as
marriage and childbearing – as primary drivers of these trends. Case (2019)
further notes that inflows of cheap heroin and fentanyl interacted with ongoing
poor economic conditions among less-educated workers to perpetuate mortality
due to these causes. Other scholars have questioned the explanatory focus on
distress and despair, especially for drug-related deaths (Roux 2017, Ruhm 2019,
Finkelstein et al. 2016). These researchers point instead to place-specific and
‘supply-side’ factors of the drug environment, particularly the role of new,
highly addictive and risky drugs. Others have also pointed to the role of the
obesity epidemic and the lagged effects of the HIV/AIDS crisis as drivers of
these trends (Masters et al. 2018).
We contribute to this
discussion by examining how two economic policies that increase after-tax
incomes of low-income Americans – the minimum wage and the earned income tax credit
(EITC) – causally affect deaths of despair.
Our study
To estimate the causal effects
of minimum wages and the EITC on mortality, we adopt a quasi-experimental
approach, leveraging state-level variation in state economic policies over a
16-year period from 1999-2015. Our primary data source consists of geocoded CDC
Multiple Causes of Death files linked with state-level demographic, economic,
and policy variables from a variety of sources (see Dow et al. 2019 for a full
description of data sources and methods).
The restricted-access
mortality files we use contain various demographic characteristics including
race, ethnicity, age, gender, and education. Education is of particular
relevance to our analysis as it serves as a proxy for exposure to the EITC and
the minimum wage. We focus specifically on mortality among adults aged 18-64
without a college degree, as this is the population most likely to be affected
by minimum wage changes and the EITC. While the term ‘deaths of despair’
typically includes deaths from drug overdoses, suicides, and alcohol-related
illness (Case and Deaton 2015), we focus here on drug overdose deaths and
non-drug suicides, which are more likely to be responsive to recent policy
changes in the short-run.
Our analysis follows the
standard difference-in-differences approach to estimate models of
cause-specific mortality over time. Our estimates suggest that both policies
significantly reduce non-drug suicides among our lower-educated sample (adults
without a college degree). Specifically, we highlight three findings. First, a
10% increase in the minimum wage reduces suicide deaths by 3.6%, while a 10%
higher maximum EITC reduces suicides by 5.5%. Based on the average annual
suicide rate in this population over the study period, this translates to a
reduction in over 1,200 suicides annually.
Second, the effect of these
policies on reducing suicide is stronger among women. A 10% increase in minimum
wages (state EITC credits) leads to a 4.6% (7.4%) reduction in suicide deaths.
This is consistent with differences in exposure to these policies, as women are
more likely to work minimum wage jobs and to be eligible for the EITC.
Third, we do not find any
differential effects of minimum wages on suicide for white non-Hispanic and
other racial/ethnic groups, yet there is suggestive evidence that the EITC may
have larger effects among people of colour.
Overall, we find that the
reduction in suicides is greater among the groups that are more likely to be
affected by higher minimum wages and generous EITCs. We find no significant
effects of these two policies among adults with a bachelor’s degree or higher –
a population less likely to work minimum wage jobs or to be eligible for the
EITC. This finding lends support to our hypothesised mechanism that these
policies reduce suicides by lifting low-income groups out of poverty.
Importantly, neither policy significantly affected drug-related deaths, which
have increased in the US with the greater availability of illegal opioids,
heroin, and fentanyl. These null effects are consistent with the arguments made
by Ruhm (2019), Finkelstein (2016), and others highlighting the supply-side
drivers of the dramatic increase in drug overdose fatalities. It is likely that
other policies are needed to combat these trends.
Evidence of causality
Our study provides the first
causal evidence of the beneficial effects of these policies on fatalities
attributable to non-drug suicide. Underlying our study design is the
fundamental assumption that we can obtain causal estimates of policy effects by
comparing states that have different minimum wages and EITC rates within the
same year. For this approach to be valid, the parallel trends assumption must
hold – that is, changes in state minimum wages and EITC rates should be uncorrelated
with unobserved drivers of mortality.
We provide strong evidence of
the parallel trends assumption by estimating an event study model that captures
the time path of effects around the time of minimum wage or EITC change. The
intuition behind these models is that higher minimum wages or EITC rates should
not have any effects on mortality in the years leading up to the policy
changes, but we should observe a discontinuous shift in the outcome at the time
of implementation. This pattern is shown in Figure 1 plotting the estimated
effects (and their 95% confidence intervals) for the minimum wage (panel A) and
EITC (panel B), each stratified by gender.
Figure 1 Event study
models of non-drug suicide

Concluding remarks
Our finding that minimum wage
increases and EITC expansions significantly reduce suicide rates are consistent
with recent research identifying economic correlates of suicide –
non-employment, lack of health insurance, home foreclosures, and debt crises
(Reeves et al. 2012, Chang et al. 2013).
More generally, these findings
further an emerging body of literature examining the relationship between
economic policies and related health behaviours and outcomes. For example,
recent research has found that minimum wage increases lead to reduced
self-reported depression among women (Horn et al. 2017), reductions in suicide
(Gertner et al. 2019), and do not have harmful effects on teen alcoholism or
drunk driving fatalities (Sabia et al. 2019). In general, a majority of the
recent papers on the effects of minimum wages on health have identified
beneficial effects, though many of these studies use questionable methods that
cast doubt on their validity as credible causal analyses (Leigh and Du 2018,
Leigh et al. 2019).
Expansions of the EITC have
been found to significantly improve the health of mothers and birth outcomes
(Evans and Garthwaite 2014, Hoynes et al. 2015, Markowitz et al. 2017), and a
recent study by Lenhart (2019) finds that EITC expansions improve self-reported
health. Taken together, these findings point to a substantial public health
benefit of increasing the minimum wage and expanding the EITC.
The minimum wage and the EITC
each raise incomes for low-wage workers. Economists have generally found that
minimum wage policies increase income and reduce poverty, while having very
little to no negative effects on employment. The new findings in this study
suggest that the benefits of minimum wage and EITC policies are broader than
previously thought and can help combat the high and increasing levels of deaths
of despair.
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