• Journal Article

Alcohol use and the wage returns to education and work experience

Citation

Bray, J. W., Hinde, J. M., & Aldridge, A. P. (2017). Alcohol use and the wage returns to education and work experience. Health Economics, 1-14. DOI: 10.1002/hec.3565

Abstract

Despite a widely held belief that alcohol use should negatively impact wages,
much of the literature on the topic suggests a positive relationship between
nonproblematic alcohol use and wages. Studies on the effect of alcohol use on
educational attainment have also failed to find a consistent, negative effect of
alcohol use on years of education. Thus, the connections between alcohol
use, human capital, and wages remain a topic of debate in the literature. In this
study, we use the 1997 cohort of the National Longitudinal Survey of Youth to
estimate a theoretical model of wage determination that links alcohol use to
wages via human capital. We find that nonbinge drinking is associated with
lower wage returns to education whereas binge drinking is associated with
increased wage returns to both education and work experience. We interpret
these counterintuitive results as evidence that alcohol use affects wages through
both the allocative and productive efficiency of human capital formation and
that these effects operate in offsetting directions. We suggest that alcohol
control policies should be more nuanced to target alcohol consumption in the
contexts within which it causes harm.