DO MINIMUM WAGES IMPROVE EARLY LIFE HEALTH?
EVIDENCE FROM DEVELOPING COUNTRIES
Farhan Majid
Arijit Nandi, José Mendoza, John Frank and Sam Harper
2
Motivation
 Early life environmental conditions play a critical role in child health
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and well being over the life-course
Famines and pandemics during early childhood have been studied
as natural experiments (Almond and Currie, 2011)
Little is understood about the causal effects of mild, commonly
observed and policy relevant shocks
Labor market institutions, specifically income protection legislation,
may shape incentives and opportunities for investing by parents,
and may subsequently impact child life health outcomes
Do minimum wages (MW) improve early life health?
3
Background on Minimum Wages

Economists have been studying the impact of minimum wages, especially
on employment, for more than six decades (Stigler, 1946; Card and Krueger,
1994)
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There is evidence that a moderate rise in the minimum wage can increase
the earnings of low-income workers without causing job losses
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However, empirical findings have also shown that higher minimum wages
lead to lower employment as costs of production increase and firms
respond by laying off workers (Neumark and Wascher, 2008)

Betcherman (2012) argues that in general, minimum wage laws lead to
modest negative or insignificant effects on aggregate employment, with a
few studies finding positive effects
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When negative employment effects are observed, it is the younger and
lesser skilled groups who tend to be affected
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Minimum Wages and Child Health
 Minimum wages influence the distribution of household socio-
economic resources and hence parental investments in child health.
 If wages increase, families may increase health services utilization
and may engage in other salutary behaviors.
 On the other hand, the effects of minimum wages may also vary
according to household socioeconomic status (SES)
 For instance, as wages increase, poorer mothers may be more likely
to spend more time in the labor market at the expense of care-giving
activities.
 Ultimately, whether minimum wage laws lead to improvements or
deterioration in child health, through changes in parental economic
conditions, is an open empirical question.
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Data
 Minimum Wage Policy Database
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Constructed by McGill University’s Maternal and Child
Health Equity Program (MACHEquity) in collaboration with
UCLA’s WORLD Policy Analysis Center
Data contains country-year observations of minimum wage
levels, as set by policy between 1999 and 2013.
We used PPP conversion and inflation factors from the
World Bank Development Indicators (WDI) to create a
minimum wage series in PPP constant 2011 US dollars.
Key Variable: Log Minimum Wage
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Data
 The Standard Demographic and Health Surveys (DHS)
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Nationally representative household surveys from 57
countries in Asia, Africa, Europe and the Americas
spanning more than a decade between 2000-2013
Health and sociodemographic information on women of
reproductive age (15–49 years), men (usually aged 15–54 or
15–59), and children ever born (Corsi et al. 2012)
Data on individual birth history as well as parental SES
Dependent Variable: Height for age z scores for children 05 years old
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Empirical Strategy
 We exploit arguably exogenous timing of changes in
minimum wages with the timing of births.
 Children born in periods of lower minimum wages, within the
same country, serve as controls for children born during
periods of higher minimum wage
 Identifying assumption: Mothers don’t time their births.
 Control for wide range of parental SES measures as well as
unobservables (explore mother fixed effects model)
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Empirical Strategy
Yimct =α+β1 lo𝑔MWct+β2Ximct +g(c,t)+Uimct (1)
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Yimct : set of outcomes of interest for child i born in year t,
belonging to mother m in country c
 Ximct: is a vector containing child, parental, household and
country level characteristics
 g(c,t): country fixed effects and time trends
 Log GDP per capital is also controlled to account for changes
in aggregate economic conditions
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Minimum Wages Lower HAZ Scores, For Females in
Particular
0.15
0.1
0.05
0
Overall
-0.05
Female
Male
Point estimates
Upper 95% CL
-0.1
-0.15
-0.2
-0.25
-0.3
Lower 95% CL
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Minimum Wage Effects by Mother’s Age and SES
0.05
0
-0.05
-0.1
Prime Aged
Mother
Married Mother Less Educated
Mother
Point estimates
Upper 95% CL
-0.15
-0.2
-0.25
-0.3
Lower 95% CL
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Minimum Wage Effects by Household Wealth
0.4
0.2
0
Poorest
-0.2
Median Income
Point estimates
Upper 95% CL
Lower 95% CL
-0.4
-0.6
-0.8
12
Minimum Wage Effects by Baseline GDP per capita
0.3
0.2
0.1
Point estimates
0
Poorest Counrty
-0.1
-0.2
-0.3
-0.4
Richer Country
Upper 95% CL
Lower 95% CL
13
Minimum Wage Effects by Region
0.4
0.2
0
SSA
Latin A.
South Asia
-0.2
Point estimates
-0.4
Upper 95% CL
Lower 95% CL
-0.6
-0.8
-1
-1.2
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Minimum Wage Effects on Maternal Employment
0.08
0.06
0.04
0.02
Point estimates
Upper 95% CL
Lower 95% CL
0
Employed
-0.02
-0.04
-0.06
Employed- Poor
Country
Employed- Rich
Country
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Minimum Wage Effects by Parent’s Occupation
0.4
0.3
0.2
0.1
0
Sales- Mother
-0.1
-0.2
-0.3
-0.4
-0.5
-0.6
Sales-Father
Manual Work Mother
Manual Work Father
Point estimates
Upper 95% CL
Lower 95% CL
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Summary
 This is the first paper to analyze the causal relation between
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minimum wages and early life health of children in low and middleincome countries
We exploit plausibly exogenous variation in minimum wages with
respect to timing of births of children born to parents who were
affected by these law, using data from 49 countries between 1999
and 2012.
We focus on important measure of child nutrition- height-for age z
scores for 0-5 year olds.
Our results do not support the hypothesis that minimum wage laws
in the developing world generally improve child health
Overall, a one percent increase in minimum wages lead to a 0.001
standard deviation decrease in HAZ scores (95% CI= -0.002, 0.000).
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Summary:
 We find that effects of minimum wage laws are very heterogeneous:
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Losers:
There is some evidence of sex bias in parental response to minimum
wage shocks, as witnessed by more adverse effects on girls
Most adverse effects are for children of parents in their prime age,
parents who are least educated, and families in the lowest wealth
quintile. And among those who work, those working in less skilled
occupations (manual work) have the most adverse effects.
We find the largest effects in the poorest countries and in the South
Asian region.
Winners:
Those residing in Latin America and those working in sales (a
relatively more skilled occupation) actually register positive effects.
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Future Work
 Given that this topic has not been studied much before, we think of
this paper as scratching the surface on an important yet underresearched topic.
 Given that we find much heterogeneity in our results, we think there
is a need for country and occupation specific studies which can
explore not only different outcomes such as infant mortality rates,
but also explore the role of parental investments in shaping these
effects.
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Extras:
Minimum Wage Effects Employment Through Affecting
Labor Demand and Labor Supply
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Extras: Minimum Wage Effects Employment and Earnings