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Is there a wage bonus from drinking? Unobserved heterogeneity examined

  • Bethany Peters
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    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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    File URL: http://www.tandfonline.com/doi/abs/10.1080/0003684042000280526
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    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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    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. Zvi Griliches & Jerry A. Hausman, 1984. "Errors in Variables in Panel Data," NBER Technical Working Papers 0037, National Bureau of Economic Research, Inc.
    3. 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.
    4. Ruhm, Christopher J. & Black, William E., 2002. "Does drinking really decrease in bad times?," Journal of Health Economics, Elsevier, vol. 21(4), pages 659-678, July.
    5. 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.).
    6. Dhaval Dave & Robert Kaestner, 2001. "Alcohol Taxes and Labor Market Outcomes," NBER Working Papers 8562, National Bureau of Economic Research, Inc.
    7. 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.
    8. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier.
    9. 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.
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