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The Effect of Illicit Drug Use on the Wages of Young Adults

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  • Robert Kaestner

Abstract

This paper examines the effects of cocaine and marijuana use on the wages of a sample of young adults drawn from the NLS Youth Cohort. The endogeneity of drug use in a wage equation is considered and a 2SLS procedure is implemented. The rather surprising results suggest that for this sample, increased use of marijuana or cocaine is associated with higher wages. The positive relationship between drug use and the wage does not diminish with age, but remains substantially positive. We also investigate whether systematic differences in the return to measures of human capital investments can explain the observed positive relationship between drug use and wages. The results from this analysis do not support such a hypothesis.

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File URL: http://www.nber.org/papers/w3535.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3535.

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Date of creation: Dec 1990
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Publication status: published as Journal of Labor Economics, vol. 9, no. 4, (October 1991), p. 381-412.
Handle: RePEc:nbr:nberwo:3535
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  11. James J. Heckman, 1977. "Dummy Endogenous Variables in a Simultaneous Equation System," NBER Working Papers 0177, National Bureau of Economic Research, Inc.
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