The impact of legislated minimum wages on the early-life health of children living in low and middle-income countries has not been examined. For our analyses, we used data from the Demographic and Household Surveys (DHS) from 57 countries conducted between 1999 and 2013. Our analyses focus on height-for-age z scores (HAZ) for children under 5 years of age who were surveyed as part of the DHS. To identify the causal effect of minimum wages, we utilized plausibly exogenous variation in the legislated minimum wages during each child's year of birth, the identifying assumption being that mothers do not time their births around changes in the minimum wage. As a sensitivity exercise, we also made within family comparisons (mother fixed effect models). Our final analysis on 49 countries reveal that a 1% increase in minimum wages was associated with 0.1% (95% CI = -0.2, 0) decrease in HAZ scores. Adverse effects of an increase in the minimum wage were observed among girls and for children of fathers who were less than 35 years old, mothers aged 20-29, parents who were married, parents who were less educated, and parents involved in manual work. We also explored heterogeneity by region and GDP per capita at baseline (1999). Adverse effects were concentrated in lower-income countries and were most pronounced in South Asia. By contrast, increases in the minimum wage improved children's HAZ in Latin America, and among children of parents working in a skilled sector. Our findings are inconsistent with the hypothesis that increases in the minimum wage unconditionally improve child health in lower-income countries, and highlight heterogeneity in the impact of minimum wages around the globe. Future work should involve 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.
Reservation wage, the lowest wage at which an individual is willing to work, plays an important role in economic models of job search, labor supply and labor market participation (e.g., Blackaby, Latreille, Murphy, O'Leary, & Sloane, 2007). Shimmer and Werning (2007) argued that a risk-averse worker's after-tax reservation wage encodes all the relevant information about her welfare. Moreover, reservation wages also help us assess beliefs of workers regarding their expected earnings in the labor market. Empirical evidence shows that reservation wages have predictive power for realized wages, unemployment durations and the types of offers that workers accept (Krueger & Mueller, 2016). However, there is a dearth of studies analyzing the gender differences in reservation wages. Caliendo, Lee, and Mahlstedt (2017) find that women report 12.5% lower reservation wages than men and that gender reservation wages primarily drive gender wage gaps in Germany. They also argue that nearly half of the gender reservation wage gap in Germany is unexplained even after accounting for labor market as well as personality characteristics. Brown, Roberts, and Taylor (2011) suggest that women in Britain, on average, report 9% lower reservation wages than men. For individuals without children, almost none of the gender reservation wage gap is explained and for individuals with children, half of the gender reservation wage gap is unexplained in Britain after controlling for individual characteristics.
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