ARE MINIMUM WAGES a SILENT KILLER? NEW EVIDENCE on DRUNK DRIVING FATALITIES Joseph J
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ARE MINIMUM WAGES A SILENT KILLER? NEW EVIDENCE ON DRUNK DRIVING FATALITIES Joseph J. Sabia, M. Melinda Pitts, and Laura M. Argys* Abstract—In volume 94 of this REVIEW, Adams, Blackburn, and Cotti alcohol-related traffic fatalities involving teen drivers. (ABC), using Fatal Accident Reporting System data from 1998 to 2006, find that a 10% increase in the minimum wage is associated with a 7% to Across a wide set of specifications, estimated alcohol-related 11% increase in alcohol-related fatal traffic accidents involving teen dri- fatal accident elasticities are very small and consistently vers. We find this result does not hold when the analysis period is indistinguishable from 0 at conventional statistical levels. expanded to include 1991 through 2013. In addition, auxiliary analyses provide no support for income-driven increases in alcohol consumption, Auxiliary analyses of data from the Current Population Sur- the primary mechanism posited by ABC. Together, our results suggest vey (CPS), the Youth Risk Behavior Survey (YRBS), and the that minimum wage increases are not a silent killer. Behavioral Risk Factor Surveillance Survey (BRFSS) also provide little support for ABC’s proposed mechanism of I. Introduction income-induced increases in alcohol consumption. In fact, our results show that minimum wage increases are associated N volume 94, number 3 of this REVIEW. Adams, Black- with modest declines in teen alcohol consumption, likely due I burn, and Cotti (2012, hereafter ABC), use data on fatal to adverse labor demand effects. Together, our results sug- accidents from the Fatality Analysis Reporting System gest that minimum wage increases are not a silent killer. (FARS) between 1998 and 2006 and find that minimum wage increases are associated with increases in alcohol- II. Fatal Accidents Involving Teen Drivers related fatal traffic accidents involving drivers aged 16 to 20.1 They estimate elasticities ranging from 0.72 to 1.1, Our analysis begins with data from FARS, the same which suggest that a 10% increase in the minimum wage source as ABC. The FARS is a census of all accidents on would lead to an additional 115 to 176 fatal accidents invol- U.S. public roads that resulted in one or more fatalities ving teen drivers. These elasticities are surprisingly large within thirty days of the accident. Information from police given much smaller estimates of the impact of the minimum reports, medical records, driver licensing registries, state wage on earnings.2 The authors’ findings persist after con- highway departments, and medical examiners is combined trolling for changes in non-alcohol-related teen fatal acci- to provide a detailed picture of drivers, vehicles, and the dents, which they interpret as evidence that minimum wage circumstances surrounding each fatal accident.3 hikes increase alcohol consumption. We draw data from 1991 to 2013 and estimate an empiri- We reinvestigate ABC’s intriguing finding over a longer cal model identical to that of ABC: time period that includes many large state and federal mini- À1 0 mum wage increases, 1991 to 2013, and find little support for U ðÞ¼Fst Xstb1 þ b2MWst þ gs þ dt þ lst; (1) the claim that higher minimum wages lead to an increase in where Fst is the alcohol-related fatal accident rate for dri- vers ages 16 to 20 in state s during year t, using the National Received for publication February 10, 2017. Revision accepted for pub- lication December 11, 2017. Editor: Amitabh Chandra. Highway Traffic Safety Administration (NHTSA) imputed * Sabia: San Diego State University, University of New Hampshire, values when there is missing information on the blood alco- ESSPRI, and IZA; Pitts: Federal Reserve Bank of Atlanta; Argys: Univer- 4 hol content (BAC) of drivers ; Xst is a vector of controls sity of Colorado Denver and IZA. We thank Dhaval Dave, Jesse Hinde, and participants at the European used in the ABC study (beer taxes, BAC .08 driving law, Health Economics Association meetings at the University of Hamburg in teen unemployment rate, per capita income, non-alcohol- Hamburg, Germany, and the International Health Economics World Con- related teen traffic accidents, and state population); MW is gress at Trinity College in Dublin, Ireland, for useful comments and sug- st gestions on an earlier draft of this paper. J.S. acknowledges grant funding the higher of the state or federal minimum wage (averaged from the Charles Koch Foundation used to support graduate research over the calendar year in 2006 dollars); Zs is a time-invar- assistants on this project at the University of New Hampshire and San iant state effect; d is a state-invariant year effect; and FÀ1 Diego State University. We thank Brittany Bass, Thanh Tam Nguyen, and t Timothy Young for excellent research assistance. The views expressed here are our own and do not necessarily represent the views of the Federal 3 The intent of including BAC reports in the FARS data is to provide an Reserve Bank of Atlanta or the Federal Reserve System. accurate measure of alcohol content and the frequency of alcohol- A supplemental appendix is available online at http://www.mitpress impaired accidents. In the FARS data, 53.2% of all drivers involved in journals.org/doi/suppl/10.1162/rest_a_00761. fatal accidents since 1991 included no BAC test result. For these drivers, 1 This age range includes typical drivers below the legal drinking age. an imputed BAC, which depends on a number of observed characteristics, Though this group includes 20-year-olds, following ABC we refer to including driver age, gender, and driving record, an indicator of the tim- these as ‘‘teen drivers’’ throughout the paper. ing and nature of the crash, and an indicator that the officer at the scene 2 An extensive body of literature suggests that estimated hourly earn- suspected alcohol involvement, is estimated (see Subramanian, 2002, and ings elasticities with respect to the minimum wage range from 0.1 to 0.2 Subramanian & Utter, 2003, for a description of the imputation process). in recent studies of teens (Allegretto, Dube, & Reich, 2011; Neumark & 4 ABC describe their dependent variable as ‘‘the number of fatal acci- Wascher, 2008; Sabia, 2009). The magnitude of ABC’s estimated alco- dents in a state for which a 16- 20-year-old had a blood alcohol concentra- hol-related fatal accident elasticity is nearly four times larger than the tion that was greater than 0.’’ We infer that they count accidents in which expected hourly earnings elasticity. a 16- to 20-year-old driver has a positive BAC. The Review of Economics and Statistics, March 2019, 101(1): 192–199 Ó 2019 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology doi:10.1162/rest_a_00761 Downloaded from http://www.mitpressjournals.org/doi/pdf/10.1162/rest_a_00761 by guest on 26 September 2021 ARE MINIMUM WAGES A SILENT KILLER? 193 TABLE 1.—SUMMARY STATISTICS Means (Standard Deviation) [N] FARS (annual state-level counts for drivers ages 16–20) Average imputed alcohol-related fatal accidents 30.764 (33.273) [1,173] Total fatal accidents 129.15 (131.05) [1,173] Nighttime fatal accidents 70.633 (75.072) [1,173] Daytime fatal accidents 57.848 (56.615) [1,173] Weekend fatal accidents 58.219 (61.750) [1,173] Weekday fatal accidents 70.263 (69.541) [1,173] YRBS (individuals ages 16–18) Alcohol consumption in last 30 Days 0.486 (0.500) [640,017] Binge drinking in last 30 days 0.313 (0.464) [666,035] Binge drinking 3 or more times in last 30 days 0.147 (0.354) [666,035] Drunk driving 0.140 (0.347) [651,680] BRFSS (individuals ages 18–20) Alcohol consumption in last 30 days 0.418 (0.493) [114,958] Binge drinking in last 30 days 0.212 (0.409) [113,735] Binge drinking 3 or more times in last 30 days 0.106 (0.308) [113,735] Drunk driving 0.034 (0.180) [60,729] CPS (individuals ages 16–20) Hourly earnings/employment 7.29 (4.53) [233,336] Usual weekly earnings 80.33 (144.70) [588,180] Employment 0.384 (0.486) [588,180] Usual weekly hours/employment 26.72 (12.42) [233,336] Independent variables (state-level characteristics) MW (2006$) 6.19 (0.58) [1,173] Non-alcohol-related fatalities 98.385 (100.03) [1,173] rate per individual ages 16–20 0.0003 (0.0001) [1,173] State population 5,618,179 (6,268,267) [1,173] Beer tax (2006$) 0.284 (0.229) [1,173] .08 BAC law 0.626 (0.484) [1,173] Per capita personal income 31,552.62 (9,487.44) [1,173] Unemployment rates ages 16–20 (%) 15.863 (5.525) [1,173] Estimates from the BRFSS and CPS are weighted using relevant survey-provided sample weights. Estimates from the YRBS are weighted using SEER population weights. TABLE 2.—ESTIMATES OF EFFECT OF MINIMUM WAGE ON ALCOHOL-RELATED TRAFFIC FATALITIES FOR INDIVIDUALS AGES 16 TO 20, 1991–2013 OLS with Transformed WLS with Transformed WLS with Dependent Variable Dependent Variable Log-Log (1) (2) (3) Average imputed alcohol-related fatal accidents 0.012 0.006 0.129 (0.011) (0.007) (0.135) Total fatal accidents 0.001 0.001 0.035 (0.003) (0.003) (0.035) Nighttime fatal accidents À0.002 À0.001 0.023 (0.006) (0.006) (0.076) Daytime fatal accidents 0.004 0.003 0.016 (0.006) (0.004) (0.068) Weekend fatal accidents 0.006 0.005 0.114 (0.006) (0.006) (0.089) Weekday fatal accidents À0.003 À0.003 À0.051 (0.004) (0.004) (0.044) N 1,173 1,173 1,173 Significant at ***1%, **5%, and *10%.