Association for Public Policy Analysis & Management

Scholars studying the minimum wage have focused primarily on its labor market impacts. But the influence of minimum wage extends beyond the labor market and can also influence psychological well-being. I exploit changes in state level minimum wages to estimate reduced form intention to treat models of the minimum wage on life satisfaction. Overall, I find net positive effects of minimum wage changes on well-being, but the effects are not uniform as the minimum wage causes some individuals to report improved well-being, and others to report a reduction in their well-being. I find the largest effects in younger adults with considerable heterogeneity by race with impacts driven by whites and Hispanics. Similarly, geographic variation in economic conditions produces disparate impacts of the minimum age on well-being. Lastly, the estimates from this analysis allow me to conduct a welfare analysis of minimum wage using a new psychic dimension.