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Are Alcoholics in Bad Jobs?

In: The Economic Analysis of Substance Use and Abuse: An Integration of Econometrics and Behavioral Economic Research

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  • Donald S. Kenkel
  • Ping Wang

Abstract

Alcohol abuse has important implications for the productivity of the US workforce. The lost earnings of workers suffering from alcohol problems have been estimated at $36.6 billion in 1990. After completing schooling, young workers face critical labor market choices with long-ranging consequences for future jobs and lifetime earnings, while many of them also drink alcohol to excess. In this paper, we provide evidence on whether the drinking choices of young adults also have long-ranging consequences for future jobs and lifetime earnings. In doing so we extend previous research on the productivity effects of alcohol to include non-wage job attributes as part of total employee compensation. The goal of this research is to establish benchmark empirical patterns describing relationships between alcoholism and job choice. Our empirical results based on the National Longitudinal Survey of Youth (NLSY) data show that male alcoholics are less likely to receive a variety of fringe benefits, are more likely to be injured on the job, and work for smaller firms. When the conventional methodology is extended to include non-wage job attributes, of an estimated total loss of $2,380 per alcoholic, about $450, or almost 20% or the total, is the value of the lost fringe benefits. The data also show that male alcoholics are less likely to be in a white collar occupation but conditional upon being in a white collar occupation their earnings are similar to their non-alcoholic peers. While alcoholics are more likely to be in a blue collar occupation, conditional upon being in such an occupation they are estimated to earn 15% less than their non-alcoholic peers. These findings help evaluate the potential effects of alcohol, education and income policies and health policy.
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Suggested Citation

  • 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.
  • Handle: RePEc:nbr:nberch:11162
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    References listed on IDEAS

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    Cited by:

    1. Ji Yan & Sally Brocksen, 2013. "Adolescent risk perception, substance use, and educational attainment," Journal of Risk Research, Taylor & Francis Journals, pages 1037-1055.
    2. Suryadipta Roy, 2005. "Are Illegal Drugs Inferior Goods?," Working Papers 05-01old Classification- , Department of Economics, West Virginia University.
    3. Cook, Philip J. & Moore, Michael J., 2000. "Alcohol," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 30, pages 1629-1673 Elsevier.
    4. Suryadipta Roy, 2005. "Are Illegal Drugs Inferior Goods?," Working Papers 05-01 Classification- JEL, Department of Economics, West Virginia University.
    5. Donald S. Kenkel & Robert R. Reed III & Ping Wang, 2002. "Rational Addiction, Peer Externalities and Long Run Effects of Public Policy," NBER Working Papers 9249, National Bureau of Economic Research, Inc.
    6. Beau Kilmer & Rosalie Liccardo Pacula, 2010. "Preventing Drug Use," NBER Chapters,in: Targeting Investments in Children: Fighting Poverty When Resources are Limited, pages 181-220 National Bureau of Economic Research, Inc.
    7. M. Christopher Auld, 2005. "Smoking, Drinking, and Income," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
    8. Philip J. Cook & Bethany Peters, 2005. "The Myth of the Drinker's Bonus," NBER Working Papers 11902, National Bureau of Economic Research, Inc.
    9. Alison Snow Jones & David W. Richmond, 2006. "Causal effects of alcoholism on earnings: estimates from the NLSY," Health Economics, John Wiley & Sons, Ltd., vol. 15(8), pages 849-871.
    10. Dave, Dhaval & Kaestner, Robert, 2002. "Alcohol taxes and labor market outcomes," Journal of Health Economics, Elsevier, vol. 21(3), pages 357-371, May.
    11. M. Christopher Auld, 1998. "Wages, Alcohol Use, and Smoking: Simultaneous Estimates," HEW 9808001, EconWPA.

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