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Conflicting economic policies and mental health: evidence from the UK national living wage and benefits freeze

Author

Listed:
  • Lateef Akanni

    (Department of Economics, University of Strathclyde)

  • Otto Lenhart

    (Department of Economics, University of Strathclyde)

  • Alec Morton

    (University of Strathclyde)

Abstract

This study evaluates the mental health effects of two simultaneously implemented but conflicting policies in the UK: the National Living Wage and the benefits freeze policy. We employed the Callaway and Sant’Anna (2021) DID estimator to evaluate the heterogeneous policy effects, and we found that NLW leads to positive improvements in mental health. Also, we find that the negative impact of the benefits freeze policy constricts the NLW effects. Our result is robust to the sensitivity analysis of the parallel trend assumption. Additional results support the psychosocial hypothesis that increased job satisfaction is strongly correlated with improvements in mental health. Also, we found evidence of substitution effects between work hours and leisure. Overall, our findings suggest that the effects of the NLW cannot be understood in isolation from how the entire suite of policy instruments operates on earnings and liveable income for affected low-wage workers.

Suggested Citation

  • Lateef Akanni & Otto Lenhart & Alec Morton, "undated". "Conflicting economic policies and mental health: evidence from the UK national living wage and benefits freeze," Working Papers 22-10, University of Strathclyde Business School, Department of Economics.
    • Handle: RePEc:str:wpaper:22-10
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    National living wage; Benefits freeze; Mental health; Income policy; Difference in Differences; Treatment effect heterogeneity;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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