Why do drinkers earn more? Job characteristics as a possible link

Yihong Bai and Michel Grignon

Health Economics, 2024, vol. 33, issue 6, 1133-1152

Abstract: After some initial controversy, an inverted U‐shape relationship between the consumption of alcohol and earnings seems to be an established result, at least in North America. It has been dubbed a “drinking premium”, at least in the lower portion of the consumption curve. It is still unclear, perhaps even counter‐intuitive, why such a drinking premium exists and the literature suggests it is not causal but results rather from selection effects. We suggest here that part of the premium is linked to occupation: some occupations pay better, controlling for the usual human capital determinants, and also attract drinkers or induce workers to drink more. Using a sample of full‐time employed or self‐employed individuals aged 25–64 and not in poor health from the 2015‐16 Canadian Community Health Survey (CCHS), we confirm the existence of a drinking premium and a positive return to the quantity or frequency of drinking up to high levels of consumption. Using information on jobs held by respondents, linked to a data set of job characteristics, we find that controlling for job characteristics reduces the premium or return to drinking by approximately 30% overall, and up to 50% for female workers.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:wly:hlthec:v:33:y:2024:i:6:p:1133-1152

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