Alcohol use and wages: New results from the national household survey on drug abuse

Abstract

A recent study published in the Journal of Health Economics by French and Zarkin [French, M.T., Zarkin, G.A., 1995. Is moderate alcohol use related to wages? Evidence from four worksites, Journal of Health Economics 14, 319-344] found evidence of a positive, inverse-U-shaped relationship between wages and alcohol consumption for individuals at four worksites. In this paper, we attempted to replicate French and Zarkin's findings using a combined sample of prime-age workers from the 1991 and 1992 National Household Surveys on Drug Abuse (NHSDA). Whereas French and Zarkin found that individuals who consume approximately 1.5 to 2.5 drinks per day have higher wages than non-drinkers and heavy drinkers, we found no evidence of a turning point at this consumption level for either men or women. Our results do suggest that men who use alcohol have approximately 7% higher wages than men who do not drink, and this apparent wage premium is approximately the same over a wide range of alcohol consumption. For women, the estimated alcohol use premium is approximately half as large as for men and is statistically insignificant.

The effect of alcohol consumption on household income in Ireland

“…Findings showing that moderate drinkers are better off in terms of household income is similar to that of previous studies, but income of heavy drinkers is higher which is in contrast to most previous findings ( Hirschberg, 2004;Zarkin et al, 1998). The difference between the income of moderate and heavy drinkers is however very small.…”

“…Previous studies show a positive association between income and moderate alcohol consumption, compared with income of either non or heavy consumers of alcohol (Barrett, 2002;French & Zarkin, 1995;Hamilton & Hamilton, 1997). Other studies find that while there was a positive correlation between income and alcohol consumption, the drop in income associated with heavy consumption of alcohol compared with moderate consumption, is not found (Bastida, 2006;Zarkin et al, 1998). Overall findings in this study show that drinkers have a higher household income than non-drinkers when controlling for differences in age, human capital and other socio-demographic characteristics and controlling for the endogenous relationship between alcohol consumption and income.…”

“…Where this occurs choices have to be treated endogenously to get consistent estimates of the income equation coefficients (Barrett, 2002;French et al, 2011;Hamilton & Hamilton, 1997;Zarkin et al, 1998;Zhang, 2004). Lee (1982) extends the Heckman two step model to a Multinomial Logit OLS Two…”

“…In relation to the study of alcohol on income, alcohol consumption is governed in part by unobserved factors which may also be important determinants of the dependent variable income, implying the possibility that the drinking status variables may be correlated with the error term of the conditional demand equation (Barrett, 2002;Di Pietro & Pedace, 2008;Hamilton & Hamilton, 1997;Zarkin, French, Mroz, & Bray, 1998). Sample selection bias arises when a sector selection is non-random due to individuals choosing a particular sector because of their personal characteristics (Heckman, 1979;Zhang, 2004).…”

In Vino Pecunia? The Association between Beverage-Specific Drinking Behavior and Wages

“…On the other hand, economists have identified a distinct positive relationship between moderate alcohol consumption and earnings (Van Ours, 2004;MacDonald and Shields, 2001;Zarkin et al, 1998). The exact mechanisms of this "alcoholincome puzzle" still remain subject to speculation.…”