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Alcohol Consumption, Smoking and Wages

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  • Hirschberg, J.
  • Lye, J.N.

Abstract

The good health of an individual is a combination of uncontrollable factors that includes genetics and random events and controllable factors through the regulation of activities such as smoking and drinking. Since the work of Grossman (1972) a significant relationship between health and earnings is predicted. In this paper, the 1995 Australian National Health Survey is used to simultaneously examine the effects of drinking and smoking on wages. To model the interaction of smoking with alcohol consumption separate models are fit for smokers and nonsmokers. These models account for potential selectivity bias resulting from the decision to smoke and endogeneity arising from a potential casual relationship between earnings and alcohol consumption.

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Bibliographic Info

Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 764.

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Length: 24 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:mlb:wpaper:764

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Keywords: WAGES ; ALCOHOL ; CONSUMPTION ; MODELS;

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References

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  1. 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.
  2. John Strauss & Duncan Thomas, 1998. "Health, Nutrition, and Economic Development," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 766-817, June.
  3. 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.
  4. John Mullahy & Jody L. Sindelar, 1995. "Employment, Unemployment, and Problem Drinking," NBER Working Papers 5123, National Bureau of Economic Research, Inc.
  5. Lee, Lung-fei & Maddala, G S & Trost, R P, 1980. "Asymptotic Covariance Matrices of Two-Stage Probit and Two-Stage Tobit Methods for Simultaneous Equations Models with Selectivity," Econometrica, Econometric Society, vol. 48(2), pages 491-503, March.
  6. Phillip B. Levine & Tara Gustafson & Ann D. Velenchik, 1997. "More bad news for smokers? The effects of cigarette smoking on wages," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(3), pages 493-509, April.
  7. Barrett, Garry F, 2002. "The Effect of Alcohol Consumption on Earnings," The Economic Record, The Economic Society of Australia, vol. 78(240), pages 79-96, March.
  8. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  9. Bush, Robert & Wooden, Mark, 1995. "Smoking and absence from work: Australian evidence," Social Science & Medicine, Elsevier, vol. 41(3), pages 437-446, August.
  10. 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.
  11. Mullahy, John & Sindelar, Jody L, 1993. "Alcoholism, Work, and Income," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 494-520, July.
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Citations

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Cited by:
  1. Pierre Pestieau & Gregory Ponthiere, 2012. "Myopia, regrets, and risky behaviors," International Tax and Public Finance, Springer, vol. 19(2), pages 288-317, April.
  2. 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).
  3. Heineck, Guido & Schwarze, Johannes, 2003. "Substance Use and Earnings: The Case of Smokers in Germany," IZA Discussion Papers 743, Institute for the Study of Labor (IZA).
  4. Joseph G. Hirschberg & Jenny N. Lye, 2004. "Inferences for the Extremum of Quadratic Regression Models," Department of Economics - Working Papers Series 906, The University of Melbourne.
  5. John Freebairn, 2010. "Special Taxation of Alcoholic Beverages to Correct Market Failures," Wine Economics Research Centre Working Papers 2010-06, University of Adelaide, Wine Economics Research Centre.
  6. Lokshin, Mikhail & Sajaia, Zurab, 2007. "The Economic Cost of Smoking: Differences in Wages between Smokers and Non-smokers in Russia," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 6(2), pages 60-80.
  7. van Ours, Jan C., 2004. "A pint a day raises a man's pay; but smoking blows that gain away," Journal of Health Economics, Elsevier, vol. 23(5), pages 863-886, September.
  8. Lixin Cai, 2009. "Effects of Health on Wages of Australian Men," The Economic Record, The Economic Society of Australia, vol. 85(270), pages 290-306, 09.
  9. Ours, J.C. van, 2002. "A Pint a Day Raises a Man's Pay; But Smoking Blows that Gain Away," Discussion Paper 2002-20, Tilburg University, Center for Economic Research.
  10. Shao-Hsun Keng & Sheng-Jang Sheu, 2013. "The effect of stimulants and their combined use with cigarettes on mortality: the case of betel quid," The European Journal of Health Economics, Springer, vol. 14(4), pages 677-695, August.

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