Increasing the minimum wage and expanding a tax credit for low-wage workers may prevent more than 1,200 suicides each year, according to a new working paper by a team of UC Berkeley researchers.
The study, published Monday by the National Bureau of Economic Research, shows that a 10 percent increase in the minimum wage and the Earned Income Tax Credit has a dramatic impact on the number of non-drug-related suicides among men and women without college degrees.
“A lot of the time the discussion of higher minimum wages is framed in narrow economic terms,” said Anna Godøy, a research economist with UC Berkeley’s Institute for Research on Labor and Employment and a co-author of the paper. “What this study shows is that the debate is not only about jobs and wages, it is also about mental health.”
“In short,” Godøy added, “our study shows that higher minimum wages are likely to save lives.”
While other studies have suggested connections between higher minimum wages and a decline in suicides, the working paper, titled “Can Economic Policies Reduce Deaths of Despair?,” is the first to prove a direct relationship.
Using 16 years of mortality data from the Centers for Disease Control, census figures and analyses of government wage and tax policies, the research team, which included economists and public health experts, was able to show how the new policies caused a decline in suicides.
“Our models show that when states implement these policies, the suicide rate drops,” Godøy said. “This further supports our conclusion that this is a cause-and-effect relationship.”
Specifically, a 10 percent increase in the minimum wage dropped suicides among men and women without college degrees aged 18 to 64 by 3.6 percent. A 10 percent increase in the Earned Income Tax Credit dropped suicides among the same group by 5.5 percent.
“Our results show that even modest increases to the incomes of low-wage workers can make a difference,” said William Dow, interim dean of UC Berkeley’s School of Public Health and a co-author of the paper. “The largest effects were on women, who are more likely to work minimum wage jobs and be eligible for the Earned Income Tax Credit.”
The paper found that increases to the minimum wage and tax credits had no significant effects on drug-related deaths.
The researchers also controlled for factors like expansion of Medicaid and did not see similar declines in suicides among a college-educated placebo sample.
Godøy said that while the Berkeley paper did not examine why an increase in minimum wage or tax credits led to a drop in the number of suicides, previous research has shown that greater financial security is connected to improved mental health.
The strong link between changes to tax and wage policies should encourage policy makers to understand the “full consequences of changes to economic policies,” when debating increasing the federal minimum wage, Godøy said.
In addition to Godøy and Dow, the research team included Christopher Lowenstein, a graduate student researcher at the School of Public Health, and Michael Reich, a professor of economics at the Institute for Research on Labor and Employment.