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Alcohol and Earnings: Does Drinking Yield a Wage Premium

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Author Info
Vivian Hamilton
Barton H. Hamilton

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Abstract

This paper examines the relationship between alcohol consumption and earnings for prime-age males. Wage differentials for nondrinkers, moderate drinkers, and heavy drinkers are estimated using a polychotomous choice model, which accounts for the endogenous relationship between drinking and earnings. The authors find that moderate alcohol consumption leads to increased earnings relative to abstention. However, heavy drinking leads to reduced earnings relative to moderate drinking. Heavy drinkers possess flatter age-earnings profiles and attain lower returns for higher education than nondrinkers and moderate drinkers. These results are in contrast to previous research on substance abuse, which finds no earnings drop-off for heavy users.

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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 30 (1997)
Issue (Month): 1 (February)
Pages: 135-51
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Handle: RePEc:cje:issued:v:30:y:1997:i:1:p:135-51

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  1. Pinka Chatterji & Margarita Alegria & Mingshun Lu & David Takeuchi, 2005. "Psychiatric Disorders and Labor Market Outcomes: Evidence from the National Latino and Asian American Study," NBER Working Papers 11893, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Levy, Amnon, 2002. "A Theory of Chronic Loss, Suffering and Alcoholism," Economics Working Papers wp02-16, School of Economics, University of Wollongong, NSW, Australia. [Downloadable!]
  3. Felicity Barker, 2002. "Consumption Externalities and the Role of Government: The Case of Alcohol," Treasury Working Paper Series 02/25, New Zealand Treasury. [Downloadable!]
  4. Edvard Johansson & Hannu Alho & Urpo Kiiskinen & Kari Poikolainen, 2007. "The association of alcohol dependency with employment probability: evidence from the population survey 'Health 2000 in Finland'," Health Economics, John Wiley & Sons, Ltd., vol. 16(7), pages 739-754. [Downloadable!]
  5. Ours, J.C. van, 2002. "A pint a day raises a man's pay; but smoking blows that gain away," Discussion Paper 20, Tilburg University, Center for Economic Research. [Downloadable!]
  6. M. Christopher Auld, 1998. "Wages, Alcohol Use, and Smoking: Simultaneous Estimates," HEW 9808001, EconWPA. [Downloadable!]
  7. Hirschberg, J. & Lye, J.N., 2000. "Alcohol Consumption, Smoking and Wages," Department of Economics - Working Papers Series 764, The University of Melbourne. [Downloadable!]
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  8. Edvard Johansson & Hannu Alho & Urpo Kiiskinen & Kari Poikolainen, 2004. "The Association of Alcohol Dependency with Employment Probability: Evidence from population survey Health 2000 in Finland," Discussion Papers 921, The Research Institute of the Finnish Economy. [Downloadable!]
  9. Pinka Chatterji & Margarita Alegria & David Takeuchi, 2008. "Psychiatric Disorders and Employment: New Evidence from the Collaborative Psychiatric Epidemiology Surveys (CPES)," NBER Working Papers 14404, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. C. Vilaplana & José M. Labeaga & S. Jiménez-Martín, 2006. "Further evidence about alcohol consumption and the business cycle," Working Papers 2006-06, FEDEA. [Downloadable!]
  11. Tekin, Erdal, 2002. "Employment, Wages, and Alcohol Consumption in Russia: Evidence from Panel Data," IZA Discussion Papers 432, Institute for the Study of Labor (IZA). [Downloadable!]
  12. Ziggy MacDonald & Michael Shields, . "The Impact of Alcohol Use on Occupational Attainment and Wages," Discussion Papers in Public Sector Economics 98/8, Department of Economics, University of Leicester. [Downloadable!]
  13. Alison Snow Jones & David W. Richmond, 2006. "Causal effects of alcoholism on earnings: estimates from the NLSY," Health Economics, John Wiley & Sons, Ltd., vol. 15(8), pages 849-871. [Downloadable!]
  14. MacDonald, Ziggy & Shields, Michael A., 2000. "The Impact of Alcohol Consumption on Occupational Attainment in England," IZA Discussion Papers 166, Institute for the Study of Labor (IZA). [Downloadable!]
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  15. Ziggy MacDonald & Stephen Pudney, . "The Wages of Sin? Illegal Drug Use and the Labour Market," Discussion Papers in Public Sector Economics 99/6, Department of Economics, University of Leicester. [Downloadable!]
  16. Ziggy MacDonald & Michael A. Shields, 2004. "Does problem drinking affect employment? Evidence from England," Health Economics, John Wiley & Sons, Ltd., vol. 13(2), pages 139-155. [Downloadable!]
  17. Keng, Shao-Hsun & Huffman, Wallace, 2005. "Binge Drinking and Labor Market Success: A Longitudinal Study on Young People," Staff General Research Papers 12299, Iowa State University, Department of Economics.
  18. van Ours, Jan C., 2002. "A pint a day raises a man’s pay; but smoking blows that gain away," IZA Discussion Papers 473, Institute for the Study of Labor (IZA). [Downloadable!]
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  19. Bethany L Peters, 2004. "Is there a wage bonus from drinking? Unobserved heterogeneity examined," Applied Economics, Taylor and Francis Journals, vol. 36(20), pages 2299-2315, November. [Downloadable!] (restricted)
  20. Pinka Chatterji & Jeffrey DeSimone, 2006. "High School Alcohol Use and Young Adult Labor Market Outcomes," NBER Working Papers 12529, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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