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Alcohol and Earnings: Does Drinking Yield a Wage Premium

Vivian Hamilton and Barton Hamilton ()

Canadian Journal of Economics, 1997, vol. 30, issue 1, 135-51

Abstract: This paper examines the relationship between alcohol consumption and earnings for prime-age males. Wage differentials for nondrinkers, moderate drinkers, and heavy drinkers are estimated using a polychotomous choice model, which accounts for the endogenous relationship between drinking and earnings. The authors find that moderate alcohol consumption leads to increased earnings relative to abstention. However, heavy drinking leads to reduced earnings relative to moderate drinking. Heavy drinkers possess flatter age-earnings profiles and attain lower returns for higher education than nondrinkers and moderate drinkers. These results are in contrast to previous research on substance abuse, which finds no earnings drop-off for heavy users.

Date: 1997
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Handle: RePEc:cje:issued:v:30:y:1997:i:1:p:135-51