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Is there a wage bonus from drinking? Unobserved heterogeneity examined

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  • Bethany Peters
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    Abstract

    While the result that drinkers earn more than abstainers has been remarkably persistent, only one paper in the literature on drinking and earnings has been written where individual fixed effects are included. This study improves the current literature by utilizing a much longer panel and focuses on the low end of drinking while controlling for unobserved heterogeneity with the inclusion of individual specific effects. It is found that while OLS specifications yield a positive significant coefficient on current drinking, even when a rich set of covariates is controlled for, including individual fixed effects renders the coefficient statistically insignificant.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 36 (2004)
    Issue (Month): 20 ()
    Pages: 2299-2315

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    Handle: RePEc:taf:applec:v:36:y:2004:i:20:p:2299-2315

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    References

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    1. Vivian Hamilton & Barton H. Hamilton, 1997. "Alcohol and Earnings: Does Drinking Yield a Wage Premium," Canadian Journal of Economics, Canadian Economics Association, vol. 30(1), pages 135-51, February.
    2. Christopher J. Ruhm & William E. Black, 2001. "Does Drinking Really Decrease in Bad Times?," NBER Working Papers 8511, National Bureau of Economic Research, Inc.
    3. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working papers 98-7, Massachusetts Institute of Technology (MIT), Department of Economics.
    4. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
    5. Dave, Dhaval & Kaestner, Robert, 2002. "Alcohol taxes and labor market outcomes," Journal of Health Economics, Elsevier, vol. 21(3), pages 357-371, May.
    6. 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.
    7. French, Michael T. & Zarkin, Gary A., 1995. "Is moderate alcohol use related to wages? Evidence from four worksites," Journal of Health Economics, Elsevier, vol. 14(3), pages 319-344, August.
    8. Zarkin, Gary A. & French, Michael T. & Mroz, Thomas & Bray, Jeremy W., 1998. "Alcohol use and wages: New results from the national household survey on drug abuse," Journal of Health Economics, Elsevier, vol. 17(1), pages 53-68, January.
    9. David Neumark & Sanders D. Korenman, 1988. "Does marriage really make men more productive?," Finance and Economics Discussion Series 29, Board of Governors of the Federal Reserve System (U.S.).
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    Cited by:
    1. 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.

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