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Employment, Wages, and Alcohol Consumption in Russia: Evidence from Panel Data

  • Tekin, Erdal

    ()

    (American University)

This paper examines the effects of alcohol consumption on employment and wages for males and females in Russia. Both cross sectional and fixed-effects models are estimated utilizing data from the Russia Longitudinal Monitoring Survey. The results from the models that do not control for unobserved heterogeneity indicate that alcohol consumption has a positive impact on employment and wages. Further, there is some evidence in favor of an inverse U-shaped relationship between alcohol consumption and the labor market outcomes. Once the unobserved heterogeneity is controlled for using fixed effects, the positive association diminishes for the employment models for males and females. For the wage models, controlling for unobserved heterogeneity strengthens the positive impact of alcohol consumption both in significance and magnitude for males, while the reverse is true for females. However, the inverse U-shaped relationship obtained in cross-sectional models no longer exists. The results underline that unobserved heterogeneity plays an important role on the relationship between alcohol consumption and labor market behavior for both males and females. The findings are robust to model specifications and various alcohol consumption measures.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 432.

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Length: 51 pages
Date of creation: Feb 2002
Date of revision:
Publication status: published in: Southern Economic Journal, 2004, 71 (2), 397-417
Handle: RePEc:iza:izadps:dp432
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  1. 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.
  2. MacDonald, Ziggy & Shields, Michael A, 2001. "The Impact of Alcohol Consumption on Occupational Attainment in England," Economica, London School of Economics and Political Science, vol. 68(271), pages 427-53, August.
  3. Andrew M. Gill & Robert J. Michaels, 1992. "Does drug use lower wages?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 45(3), pages 419-434, April.
  4. Robert E. Hall, 1987. "Consumption," NBER Working Papers 2265, National Bureau of Economic Research, Inc.
  5. 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.
  6. 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.
  7. Kaestner, Robert, 1991. "The Effect of Illicit Drug Use on the Wages of Young Adults," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 381-412, October.
  8. Andrew M. Gill & Robert J. Michaels, 1992. "Does Drug Use Lower Wages?," ILR Review, Cornell University, ILR School, vol. 45(3), pages 419-434, April.
  9. John Mullahy & Jody L. Sindelar, 1995. "Employment, Unemployment, and Problem Drinking," NBER Working Papers 5123, National Bureau of Economic Research, Inc.
  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. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  12. 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.
  13. 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.
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