Minimum Wages, the Earned Income Tax Credit, and Mental Health Around Pregnancy

Abstract

This study estimates the effects on perinatal mental health of the state's minimum wage and earned income tax credit (EITC), controlling for other policies and state-level factors. Using data from the Pregnancy Risk Assessment Monitoring System for 2012-2018 births we find robust evidence that minimum wages and EITC levels reduce depression before pregnancy and suggestive evidence of minimum wages reducing postpartum depression, at least for married respondents. Our estimates suggest that a one dollar increase in the minimum wage ($100 increase in the state EITC) reduces pre-pregnancy depression by roughly 8.5% (1.5%). These findings stand up to standard robustness and falsification tests, including event study analyses, a wide array of alternative specifications, and finding no effect for those unlikely to benefit (e.g., college-educated respondents). A supplementary analysis using data from the Behavioral Risk Factor Surveillance System suggests that state EITC levels may reduce mental distress during pregnancy. We investigate possible mechanisms by providing a descriptive analysis of the income and work behavior of such households, which shows the wide reach of these policies, and investigating a broad set of outcomes from the PRAMS, such as financial stressors, health insurance and birth outcomes.

Keywords: earned income tax credit; mental health; minimum wages; perinatal health.