Association for Public Policy Analysis & Management

Increasing the minimum wage is one of the most common tools that policymakers use to raise incomes of low-skilled persons. It is also one of the most controversial. Recently, there has been several relatively large increases in minimum wages. Seattle, San Francisco, Los Angeles, New York and Washington DC all have $15 minimum wage laws on the books. In 2014, President Obama issued an executive order raising the minimum wage of federal contractors to $10.10. In 2019, 29 states and DC have minimum wages that exceed the federal minimum wage of $7.25. The flurry of recent, legislative activity on the minimum wage and the size of recent minimum wage increases have renewed the debate over the value of minimum wage statutes.

Proponents of increasing the minimum wage suggest that it would increase earnings and reduce income inequalities. Opponents, however, argue that an increase in the minimum wage will raise employers’ cost of labor, decrease employment and raise prices. Notably, potential effects of the minimum wage on non-labor market outcomes such as health are not commonly considered in the debate, which is an oversight, as such effects are important for understanding the full impact of minimum wage policies. Therefore, understanding how minimum wage changes affect infant health is essential for understanding not only short-term consequences, but also potentially long-run impacts on health given the importance of early life status for long-term wellbeing.

We provide one of the first studies of the effects of minimum wages on infant health. Specifically, we evaluate how state-level minimum wages affect birth weight, gestational age, and fetal growth among births of low-educated women in the US between 1989 and 2012. We also examine two potential mechanisms, prenatal care and maternal smoking. We use data from birth certificates and a difference-in-differences research design to obtain estimates of the effect of minimum wages on outcomes that are plausibly interpreted as causal. Results from the study indicate that a $2 increase in the minimum wage during the two-years prior to a birth increases birth weight significantly, but by a small amount: approximately 2 grams (0.06 percent) among low-educated mothers. However, this average effect masks heterogeneous effects between demographic groups. Effects are larger for younger and/or married mothers although still quite small relative to the mean, and there is no evidence of improvement in birth outcomes for older and/or unmarried mothers. In terms of the effects of income from the minimum wage, these estimates suggest that a $1000 change in annual earnings one year prior to birth is associated with a 4 gram (0.13 percent) increase in birth weight on average (assuming no effects from the minimum wage on employment). This improvement in birth weight is driven by an increase in fetal growth (birth weight conditional on gestational age) and gestational length. In terms of mechanisms, we find no evidence that effects on birth weight are due to changes in prenatal care use and maternal smoking.