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Wages, Alcohol Use, and Smoking: Simultaneous Estimates

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Author Info

  • M. Christopher Auld

    (University of Calgary)

Abstract

This paper estimates a simultaneous model of moderate and problem drinking, smoking, and wages using a random sample of employed Canadian men. The results indicate that sample selection into alcohol and tobacco use is not negligible. With all else in the system held constant, moderate and heavy drinking are both associated with considerably higher wages than abstention from drinking, whereas smoking is associated with lower wages. Allowing for feedback from wages to substance use is important: if wages are excluded from the substance use equations, the premium to heavy drinking disappears, the premium for moderate drinking rises, and the penalty to smoking is diminished.

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File URL: http://128.118.178.162/eps/hew/papers/9808/9808001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series HEW with number 9808001.

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Length: 40 pages
Date of creation: 11 Aug 1998
Date of revision:
Handle: RePEc:wpa:wuwphe:9808001

Note: Type of Document - PostScript; prepared on Linux 2.0; to print on PostScript; pages: 40; figures: included
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Web page: http://128.118.178.162

Related research

Keywords: alcohol; tobacco; simultaneous equations; maximum simulated likelihood;

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References

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  1. Mullahy, John & Sindelar, Jody, 1996. "Employment, unemployment, and problem drinking," Journal of Health Economics, Elsevier, vol. 15(4), pages 409-434, August.
  2. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
  3. V.A. Hajivassiliou & P. A. Ruud, 1993. "Classical Estimation Methods for LDV Models Using Simulation," Econometrics 9311002, EconWPA.
  4. Don Kenkel & Ping Wang, 1998. "Are Alcoholics in Bad Jobs?," NBER Working Papers 6401, National Bureau of Economic Research, Inc.
    • Donald S. Kenkel & Ping Wang, 1999. "Are Alcoholics in Bad Jobs?," NBER Chapters, in: The Economic Analysis of Substance Use and Abuse: An Integration of Econometrics and Behavioral Economic Research, pages 251-278 National Bureau of Economic Research, Inc.
  5. Lee, L-F., 1990. "On Efficiency of Methods of Simulated Moments and Maximum Simulated Likelihood Estimation of Discrete Response Models," Papers 260, Minnesota - Center for Economic Research.
  6. Frank J. Chaloupka & Adit Laixuthai, 1997. "Do Youths Substitute Alcohol and Marijuana? Some Econometric Evidence," Eastern Economic Journal, Eastern Economic Association, vol. 23(3), pages 253-276, Summer.
  7. 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.
  8. Frank J. Chaloupka, 1990. "Rational Addictive Behavior and Cigarette Smoking," NBER Working Papers 3268, National Bureau of Economic Research, Inc.
  9. Manning, Willard G. & Blumberg, Linda & Moulton, Lawrence H., 1995. "The demand for alcohol: The differential response to price," Journal of Health Economics, Elsevier, vol. 14(2), pages 123-148, June.
  10. Phillip B. Levine & Tara A. Gustafson & Ann D. Velenchik, 1995. "More Bad News for Smokers? The Effects of Cigarette Smoking on Labor Market Outcomes," NBER Working Papers 5270, National Bureau of Economic Research, Inc.
  11. Cook, Philip J. & Moore, Michael J., 1993. "Drinking and schooling," Journal of Health Economics, Elsevier, vol. 12(4), pages 411-429, December.
  12. 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.
  13. Hajivassiliou, Vassilis & McFadden, Daniel & Ruud, Paul, 1996. "Simulation of multivariate normal rectangle probabilities and their derivatives theoretical and computational results," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 85-134.
  14. Robert Kaestner, 1990. "The Effect of Illicit Drug Use on the Wages of Young Adults," NBER Working Papers 3535, National Bureau of Economic Research, Inc.
  15. Mullahy, John & Sindelar, Jody L, 1991. "Gender Differences in Labor Market Effects of Alcoholism," American Economic Review, American Economic Association, vol. 81(2), pages 161-65, May.
  16. 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.
  17. 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.
  18. repec:cup:etheor:v:8:y:1992:i:4:p:518-52 is not listed on IDEAS
  19. 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.
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Citations

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Cited by:
  1. van Ours, Jan C, 2002. "A Pint a Day Raises a Man's Pay; But Smoking Blows that Gain Away," CEPR Discussion Papers 3308, C.E.P.R. Discussion Papers.
  2. Dummann, Kathrin, 2008. "Retirement saving and attitude towards financial intermediaries: Evidence for Germany," Thuenen-Series of Applied Economic Theory 99, University of Rostock, Institute of Economics.
  3. Kim, Vitally, 2010. "Level of alcohol consumption and worker’s labor market position. Multivariate probit model approach," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 18(2), pages 53-77.
  4. 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.
  5. 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.
  6. Ours, J.C. van, 2005. "Cannabis, Cocaine and the Wages of Prime Age Males," Discussion Paper 2005-14, Tilburg University, Center for Economic Research.

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