The downstream benefits of higher incomes and wages

Anna Godøyand Ken Jacobs
Published by the Federal Reserve Bank of Boston, Community Development Discussion Papers, 2021 Series • 21–1


Today, the Federal Reserve Bank of Boston released a new review paper by Ken Jacobs and Anna Godoy exploring the positive societal downstream effects of higher wages on working families.

This review of the research finds public policies that raise family incomes, like the minimum wage and the Earned Income Tax Credit, have broad, positive, and long-lasting effects on workers and their families.

Increases in parental income are found to improve societal outcomes, including mental and physical health, child development and school achievement, civic engagement, racial equity, and many other dimensions of individual and social well-being.

In light of President Biden’s economic recovery agenda — with the American Rescue Plan passed last month and a proposed $2 trillion jobs plan focused on infrastructure and the climate — our research has important implications for policies aimed at improving wages and family incomes.

Ken Jacobs is the Chair of the UC Berkeley Labor Center.

Anna Godøy is a researcher at the Norwegian Institute of Public Health. Previously, she was a research economist at the Center for Wage and Employment Dynamics at UC Berkeley.

Read the full paper here.