UC Berkeley researchers find increasing minimum wage reduces ‘deaths of despair’

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The study found that changing minimum wage and earned income tax credit policies had no significant effects on drug- or alcohol-related deaths but had significant effects on nondrug suicides.

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A study led by the UC Berkeley School of Public Health found increasing minimum wage and earned income tax credit, or EITC, can reduce deaths due to suicide, drug overdose and alcohol, known as “deaths of despair.”

From 2014 to 2017, overall life expectancy decreased in the United States as “deaths of despair” dramatically increased among low-income Americans without college degrees, according to the study. In response, campus researchers examined minimum wage and EITC policy changes in 47 states to determine how those economic policies affect rising rates of “deaths of despair.”

“Our findings should be of interest to policymakers seeking to understand the full impact of changes to labor market policies, in particular, policies aimed at low-income Americans,” said Anna Godøy, research economist at the UC Berkeley Center for Wage and Employment Dynamics and study co-author, in an email. “Our study contributes to an emerging body of literature examining the relationship between economic policies and related health behaviors and outcomes.”

By utilizing data from the U.S. Centers for Disease Control and Prevention, researchers compared rates of “deaths of despair” in each state from 1999 to 2017 to examine what variations occurred after minimum wage and EITC policies were implemented or changed, according to Godøy. This data was compared with data from “control” states that did not implement the two economic policies.

The study found that the two economic policies had no significant effects on drug- or alcohol-related deaths but had significant effects on nondrug suicides. According to the study, a 10% increase in the minimum wage reduced nondrug suicides among lower-educated adults by 2.7%, with the same increase in EITC reducing it by 3%.

“Based on our study, we estimate that increasing both of these economic policies, even by just 10%, would prevent around 700 suicides each year,” said Chris Lowenstein, graduate student researcher at the UC Berkeley Institute for Research on Labor and Employment and study co-author. “That just goes to show how much of an impact these economic policies have on population health.”

Lowenstein said researchers can only speculate on the potential reasoning behind the difference in findings for drug- or alcohol-related deaths and nondrug suicides.

He added, however, that the study’s findings are consistent with prior studies that demonstrate how “income shock,” such as relaxing budget constraints or improving access to mental health services, could mitigate public health concerns about “deaths of despair.”

“What we hope this study contributes, is that there are also other downstream effects from these labor market policies on population health, which is important to consider in any policy discussions,” Lowenstein said. “There is a potential for these findings to help in two ways, not only to increase incomes and reduce poverty, but also help prevent these ‘deaths of despair.’ ”

Contact Annika Kim Constantino at [email protected] and follow her on Twitter at @AnnikaKimC.