smoking drinking and income in an effort to increase understanding of the alcohol income puzzle the finding that drinking appears to lead to higher income this paper presents maximum simulated likelihood estimates of a system of limited dependent variables governing smoking and drinking patterns and income with all else held constant moderate drinking is associated with 10 percent higher income and heavy drinking associated with 12 percent higher income than drinking abstention smoking is associated with larger effects on income than drinking single equation estimates suggest smokers earn 8 percent less than nonsmokers and the smoking penalty rises to 24 percent after correcting for endogeneity

interest rates inflation and the aggregate consumption function this paper reports on an empirical study of the effects of interest rates and inflation on aggregate consumption in the united states empirical evidence based on quarterly u s data from the postwar period is first presented in support of the hypothesis that the real rate of interest varies inversely with the rate of inflation at least in the short run regression estimates of an aggregate consumption function for the united states also based on quarterly data from the postwar period are then presented these estimates indicate that the propensity to consume varies inversely with interest rates and directly with the rate of inflation

what s legal and what s not the regulation of opiates in 1912 this paper develops a model to explain state level opiate regulation in 1912 the personal choice of whether to engage in mainstream or deviant activity is determined by consumption technology and market prices and voting determines the legality of deviant behavior voting outcomes depend on population characteristics including diversity tolerance visiblilty of deviance and the distribution of consumption efficiencies a logit equation whose dependent variable is the presence of a state opiate prescription law is estimated results broadly support the collective choice model and disconfirm the role of interest groups particularly physicians in determining prescription regulation i introduction alcohol and nicotine may be the most dangerous drugs sold today considering their effects on health and accidents legal restrictions on the sale and private use of tobacco and alcohol are minor some currently illegal substances including marijuana and opiates might in fact be less harmful than alcohol and tobacco ff used in moderation why are some commodities legal and others not economists should be interested in the question for two reasons the first is that the work of non economists often uses economic metaphors a number of historians have described the prohibition of alcohol and opiates in america in terms of interest group politics 1 economists however have yet to explain these episodes using their own models of regulation and collective choice the second reason is that the historical facts are dramatic enough to tax the explanatory power of economics between 1890 and 1920 private transactions in alcohol and opiates went from being virtually unregulated by the federal government to complete illegality 2 this change in legal status was not a response to new scientific knowledge about the substances becker s model of household production 1981 chs 1 and 2 formalizes the questions at issue lannaccone 1988 has recently used becker s model to analyze the sociological distinction between mainstream churches and religious sects assuming individuals have differing consumption technologies he derives propositions about the characteristics of religious sects and their members iannaccone 1988 242 45 notes that churches are characterized by inclusivity and sects by exclusivity church members have more heterogeneous beliefs socialize mainly with people from outside their church and place few demands on their church for non religious support services churches are more tolerant of diverse behavior and place fewer restrictions on the conduct of members church members span a wider range of demographics than do sect members they are on average economically better off than sect members but sect members contribute more funds to their institutions the distinction between churches and sects is analogous to that between licit and illicit drug use drug users are demographically more homogeneous than nonusers more poorly socialized and more likely to spend a major portion of their time in drug related activity 3 they have lower productivity than alcohol or tobacco users both at work and in household consumption 4 and are more likely to restrict themselves to companions with similar consumption patterns kandel and maloff 1983 suggest that learning to use drugs in the subculture resembles an initiation into the rites and beliefs of a deviant sect according to winick 1974 the exit from drug taking like that from a sect is often a total burnout to zero use which occurs at a predictable time the church sect model yields such predictions about drug use and generalizes individualistic models of that activity 5 in the next section i model an individual who receives utility from consumption itself and from the attitude or state of mind in which consumption takes place consumption and attitude are the outputs of household production functions after deriving the optimum in a two activity model i analyze the choice between mainstream and deviant attitudinal activities

the demand for beer wine and spirits a survey of the literature the demand for alcohol literature is vast and much conflicting information about the nature of the demand for alcoholic beverages has been published this paper presents a survey of the literature and then uses the technique of meta regression analysis to establish insights into the nature of the demand for beer wine and spirits unlike previous meta studies of the demand for alcoholic beverages this study adjusts for the precision of each elasticity estimate the analysis presented suggests reported elasticity estimates will be influenced by such factors as estimation technique data frequency and time period under consideration with respect to time the findings suggest that the demand for alcoholic beverages has become less inelastic since the mid 1950s and that the income elasticity has been falling since the mid 1960s the analysis also found support for the idea that alcohol as a commodity group is a necessity and that consumers respond to price discounting with inventory behaviour rather than true substitution behaviour little support is found for the idea that the demand for alcoholic beverages varies fundamentally across most countries although wine may be an exception language en

does the welfare state induce risk taking abstract in cross national data on individual and country level characteristics the variance of log annual income is shown to correlate positively with indicators of redistribution the database comes from the panel comparability paco project which provides uniquely comparable cross national panel data including both eastern and western europe and the us a random effects permanent income regression is used to estimate income variance the variance estimates are then regressed on individual and country characteristics the results indicate robustly that various measures of risk are higher in countries with a higher share of social spending in gdp the evidence can be interpreted as support for the argument that the welfare state encourages risk taking and thereby economic growth

who pays the bar tab beer consumption and economic growth in the united states what drug provides americans with the greatest pleasure and the greatest pain the answer hands down is alcohol the pain comes not only from drunk driving and lost lives but also addiction family strife crime violence poor health and squandered human potential young and old drinkers and abstainers alike all are affected every american is paying for alcohol abuse phillip j cook paying the tab the costs and benefits of alcohol control 2007 i introduction alcohol consumption has severe social and economic consequences lost productivity disability early death crime family neglect personality deterioration to name a few cook 2007 at the individual level the effects of alcohol consumption have been explored considerably by researchers in different fields including economics medicine public health criminology and sociology however few studies have examined the economic impact of alcohol use at the aggregate level probably due to the research deficiency regarding its aggregate effects some disagreement exists about the overall net benefits of alcohol use on the one hand scholars who have done extensive research on individual outcomes claim that the overall costs of alcohol use outweigh its benefits for example cook and moore 2002 120 state in their review article the production and sale of alcoholic beverages account for a small share of national product in the united states and in other advanced economies however the deleterious effects of alcohol consumption on health and safety constitute a substantial economic burden reducing our overall standard of living on the other hand organizations formed by the producers and distributors of alcoholic beverages claim that the alcoholic beverage industry contributes significantly to the u s economy through job creation and tax revenues according to beer serves america 2011 an organization sponsored by the beer institute and the national beer wholesalers association nbwa directly and indirectly the beer industry employs approximately 1 8 million americans paying them over 71 billion in wages and benefits the industry pays over 44 billion in business personal and consumption taxes including 5 3 billion in excise taxes and 5 8 billion in sales gross receipts and other taxes 1 similarly the distilled spirits council of the united states discus 1999 the national trade association representing america s leading distillers and about 70 of all distilled spirits brands sold in the united states states that the alcohol beverage industry is a major contributor to the u s economy through job creation wages and taxes 2 room and jernigan 2000 point out that the benefits reaped from the alcohol industry in terms of economic development should be weighed against the negative impacts on economic development in addition to public health they go on to say that alcohol s contribution to total production can vary tremendously from country to country generating 3 of total manufacturing value added in argentina or the netherlands but as little as 0 07 in iran aside from the aforementioned contributions of the alcohol industry to the economy often cited by the industry itself supply side efforts also play a role in the consumption of alcohol this can be done through influencing government regulation of the market for alcohol and selling cheap alcohol in bulk which has a devastating public health impact stockwell and crosbie 2001 indeed the economic burden of excessive alcohol consumption has been found to be substantial recently estimated at 223 5 billion bouchery et al 2011 although a few studies have examined the impact of macroeconomic conditions on drinking prevalence and patterns such as those by ruhm and black 2002 and ruhm 1995 we are not aware of any studies exploring the impact of alcohol consumption on economic growth

the morning after alcohol misuse and employment problems using a rich recent and nationally representative longitudinal survey specifically designed to examine alcohol use and associated problems we investigate the effects of alcohol misuse on a series of understudied and perhaps less common employment problems such problems include being fired or laid off from a job sustained unemployment and conflicts with a supervisor and or co worker after controlling for time invariant omitted variables via fixed effects estimation we find evidence that three measures of alcohol misuse are significantly related to employment problems the results offer new information on the potential adverse labour market effects of alcohol misuse and shed light on potential mechanisms through which alcohol misuse may impact intensive labour supply and or wages

behavioral responses to risk in rural china does risk perpetuate poverty in a credit constrained economy jalan and ravallion study portfolio and other behavioral responses to measured risk using household panel data for rural china one quarter of wealth is held in unproductive liquid forms but only a small share of this appears to be a precaution against income risk the authors estimate that eliminating income risk would reduce the share of wealth held in liquid form by less than 1 percentage point moreover that effect is confined largely to middle income groups high income households do not it seems need to hold unproductive cautionary wealth and the poor probably cannot afford to do so the authors find no evidence that income risk discourages schooling but risk does inhibit the out migration of labor generally the results provide only limited support for the idea that uninsured risks promote unproductive portfolio behavior in this setting there is such an effect but it is small in magnitude and cannot be deemed an important cause of poverty

unemployment insurance and precautionary saving abstract models of precautionary saving imply that households will hold more assets when faced with greater income uncertainty however previous empirical studies of income uncertainty have produced somewhat mixed support for the precautionary saving hypothesis in this paper we note that differences in the state contingent income stream available to workers through the unemployment insurance ui program provides an excellent source of variation for testing the presence of a precautionary savings motive simulations of a stochastic life cycle model suggest that a ui system similar to the type currently in place in the u s can lead to a significant reduction in the assets accumulated by a median worker moreover there is considerable variation in the ui benefit schedules for workers living in different states in the u s which provides an exogenous source of variation for empirically testing the precautionary saving hypothesis we carry out this test using data on expected ui benefit replacement rates and financial assets held by households in the survey of income and program participation our empirical results are consistent with the predictions of the model and suggest that reducing the ui benefit replacement rate by 50 percent would increase gross financial asset holdings by 14 percent or 241 for the average worker we also find empirical evidence that this crowd out effect of ui on household saving is stronger for those facing higher unemployment risk and weaker for older workers both of which are implications from our precautionary saving model

precautionary savings a panel study theoretical literature shows that income uncertainty boosts saving yet empirical work is incomplete i test for the precautionary motive for saving using panel data knowing this motive s size is important for gauging the responsiveness of saving to government programs that reduce uncertainty and for comparison to other motives such as bequests most empirical studies of precautionary saving use either aggregate time series or cross sectional data which cannot capture the effects of individual income uncertainty i derive measures of total permanent and transitory income uncertainty from panel data the national longitudinal survey and find a strong precautionary motive a doubling of uncertainty increases the ratio of wealth to permanent income by 29

the effect of drinking and smoking on the labour market outcomes of low income young adults among adults the causal drinking bonus and smoking penalty have been estimated to be as large as 12 and 24 respectively the magnitudes of these effects compare in size with many active labour market programs targeted at low income young adults this article extends the literature by examining these relationships in such a group somewhat surprisingly the data indicate that just as in the greater population young drinkers have more favourable labour market outcomes than nondrinkers however when a fixed effects approach is used to identify causal impacts there is no evidence that drinking has a positive impact on labour market outcomes and some evidence for negative returns to drinking the smoking penalty is estimated to be much smaller among this group and not statistically significant finally estimates suggest that the observed correlations between consumption and labour market outcomes are biased by unobserved characteristics of the individual as well as unobservables that change over time t

an economic theory of workaholics and alcoholics this paper considers the role of alcohol in agency problems in order to provide an economic rationale for alcoholics and workaholics in our model alcohol reduces productivity but also can make imbibers blurt private information we show that in the optimal contract low productivity workers are compelled to over indulge in alcohol while high productivity workers overproduce output thus workers are made into alcoholics and workaholics depending on their productivity we conclude that excessive drinking working may be the result not the cause of low high productivity of workers jel d82 vsop

channels of interstate risk sharing united states 1963 1990 we develop a framework for quantifying the amount of risk sharing among states in the united states and construct data that allow us to decompose the cross sectional variance in gross state product into several components which we refer to as levels of smoothing we find that 39 percent of shocks to gross state product are smoothed by capital markets 13 percent are smoothed by the federal government and 23 percent are smoothed by credit markets the remaining 25 percent are not smoothed we also decompose the federal government smoothing into subcategories taxes transfers and grants to states

the impact of alcohol consumption on occupational attainment in england in this study we provide evidence on the effect of alcohol consumption on occupational attainment in england to do this we use samples of employees from the health survey for england between 1992 and 1996 we find that owing to the endogenous nature of alcohol consumption ols estimates may provide a biased picture of the impact of alcohol consumption on occupational attainment using various sets of instrumental variables we find positive and significant returns to moderate levels of drinking for male and female employees which drop off rapidly as consumption increases

how income transfer programs affect work savings and the income distribution a critical review for helpful comments on earlier drafts we thank without implicating moses abramovitz yves balcer john bishop alan blinder richard burkhauser michael darby irwin garfinkel alan gustman daniel hamermesh martin holmer george jakubson robert lampman paul menchik robert moffitt michael murray joseph quinn timothy smeeding eugene smolensky barbara wolfe and two anonymous referees

the production of functionality by the elderly a household production function approach this paper extends becker s model of the household production function of human capital to the production of elderly functionality in this model elderly functionality is produced with the direct inputs of assistive devices personal assistance and nutritional intake education endowment variables like genetic endowment and sex and health conditions like stroke determine the production function environment data from the survey of asset and health dynamics among the oldest old ahead are used to estimate a production function of bathing functionality using a two stage estimation procedure in the first stage input demands for the endogenous functionality inputs are estimated recognizing health heterogeneity the results suggest that reverses in functionality caused by age and health conditions can be partially compensated for by the use of assistive devices like grab bars and bathing equipment secure nutritional intake and moderate alcohol consumption however non inputs like chronic healt

do drinkers earn less theoretical work by becker and others on human capital led initially to empirical research on the determinates of earnings interest in human capital has now spread to other areas especially health this movement is in conjunction with societal concerns regarding the role of diet and environmental factors on human well being and performance following becker 1 and grossman 9 economists expect to find a significant relationship between health and earnings health aspects of human capital have been extensively explored since the early work of grossman 9 10 good health is both beyond the control of the individual exogenous as a result of genetic factors and random events and controllable endogenous through the regulation of activities such as smoking drinking eating exercise and other informed choices this study examines the relation between earnings and drinking curiously little rigorous empirical work has been done on the relation between earnings and drinking irving fisher s claim to the contrary 1 there is little evidence that prohibition led to substantial if any productivity increases although it is established that excessive drinking leads to poor health the empirical evidence regarding earnings and drinking is mixed and inconclusive according to the u s government abusive drinkers earn less in their biennial reports to congress the national institute on alcohol abuse and alcoholism niaaa estimates the economic cost to society of alcohol abuse approximately half of this cost arises from the estimated loss in earnings productivity due to abusive drinking 2 their approach consists of estimating a wage equation which includes human capital variables as well as a dichotomous abusive drinking variable and quantity of alcohol consumed 3 berger and leigh 3 used a sample selection model to test whether drinkers earned more or less than nondrinkers they divided their sample from the 1972 73 quality of employment survey into two categories drinkers and nondrinkers using a sample selection correction estimator hedonic wage regressions for each category and by sex were estimated they found that drinkers moderate and abusive combined earned more than nondrinkers comparisons were then made between wages from each regression with demographic and human capital variables set at

indivisible labor lotteries and equilibrium abstract this paper considers an economy where labor is indivisible and agents are identical although the discontinuity in labor supply at the individual level disappears as a result of aggregation it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy it is also shown that optimal allocations involve lotteries over employment and consumption

psychiatric disorders and labor market outcomes evidence from the national comorbidity survey replication this paper uses the national comorbidity survey replication to estimate effects of recent psychiatric disorder on employment hours worked and earnings we employ methods proposed in altonji et al 2005a which use selection on observable traits to provide information regarding selection along unobservable factors among males disorder is associated with reductions in labor force participation and employment when selection on observed characteristics is set equal to selection on unobserved characteristics the magnitudes of these effects for males are 9 and 14 percentage point reductions for participation and employment respectively among females we find negative associations between disorder and labor force participation and employment but these estimates are more sensitive to assumptions about selection there are no effects of disorder on earnings or hours worked among employed individuals

a cross national comparison of permanent inequality in the united states and germany traditional cross sectional measures find greater inequality in the united states than in industrialized western european countries but are unable to distinguish transitory from permanent inequality with longitudinal data we measure cross sectional inequality during the 1980s using the shorrocks measure of income stability to find the degree to which single period measures exaggerate permanent inequality surprisingly given the smaller social welfare system and the less restrictive labor markets in the united states we find that both single period inequality and the share of that inequality that persists over time are greater in the united states than in germany

is there a wage bonus from drinking unobserved heterogeneity examined while the result that drinkers earn more than abstainers has been remarkably persistent only one paper in the literature on drinking and earnings has been written where individual fixed effects are included this study improves the current literature by utilizing a much longer panel and focuses on the low end of drinking while controlling for unobserved heterogeneity with the inclusion of individual specific effects it is found that while ols specifications yield a positive significant coefficient on current drinking even when a rich set of covariates is controlled for including individual fixed effects renders the coefficient statistically insignificant

a sequential study of migration and job search this paper designs a multiarmed bandit mab sequential model for the analysis of the migration job search process the implications either are compatible with well known migration behavior or when novel are also plausible for example regions with large wage variability attract migrants and regions with large nonpecuniary returns increase both in migration and out migration a major advantage of this approach is the relative ease with which martingale estimators can be derived from the martingale structure of the model these martingale methods are exemplified for the return migration phenomenon

the drinkers bonus in the military officers versus enlisted personnel applied economics published the first article reporting the findings of drinkers earning more than nondrinkers in 1988 the positive correlation between drinking and higher wages has existed in the economics literature on alcohol consumption for almost two decades however a clear explanation for this finding is only beginning to emerge i use data on male military personnel from the 1985 worldwide survey of alcohol and nonmedical drug use among military personnel to explore a theory of social capital specifically one way individuals can invest in social capital is through drinking in certain settings abstainers miss out on opportunities to increase their social capital stock because they forego social interaction that could result in promotion some evidence comes from exploring the wage bonus for officers versus enlisted i find the effect of different drinking levels on wages varies with station in the military officers who drink between two and 38 drinks per week earn between 2 and 8 more than o

a theory of the welfare state the welfare state can be seen as an insurance device that makes lifetime careers safer increases risk taking and suffers from moral hazard effects adopting this view the paper studies the trade off between average income and inequality evaluating redistributive equilibria from an allocative point of view it studies the problem of optimal redistributive taxation with tax induced risk taking and shows that constant returns to risk taking are likely to imply a paradox where more redistribution results in more post tax inequality in general optimal taxation will either imply that the redistribution paradox is present or that the economy operates at a point of its efficiency frontier where more inequality implies a lower average income redistribution welfare state

switching costs and sectoral adjustments in general equilibrium with uninsured risk abstract consider a two sector economy subject to recurring technological shocks these affect earnings in the two sectors differently creating incentives for workers to switch occupation switching costs are sunk individuals are risk averse and cannot diversify their income risk we characterize the rational expectations equilibrium of the economy and illustrate the extent to which uncertainty and switching costs increase labor immobility the resulting equilibrium is not even second best optimal even a government that cannot transfer income to achieve insurance can improve matters by speeding up the reallocation of labor across sectors because that reduces relative price variability journal of economic literature classification numbers d52 d62 j62

international risk sharing and european monetary unification abstract we explore income and consumption smoothing patterns among european community ec countries and among oecd countries during the period 1966 90 we find that for oecd as well as for ec countries about 40 percent of shocks to gdp are smoothed at the one year frequency with about half the smoothing achieved through national government budget deficits and half by corporate saving at the three year differencing frequency only 25 percent of shocks to gdp are smoothed mainly via government lending and borrowing in the absence of alternative income and consumption smoothing mechanisms the restrictions on budget deficits imposed by the maastricht treaty should be relaxed to allow governments to run large temporary deficits in response to output shocks

fiscal flows in the united states and canada lessons for monetary union in europe regional flows of federal taxes and transfers within the united states and canada are used to analyze long term fiscal flows the redistributive element and short term responses to regional business cycles the stabilization element in the united states long run flows amount to 22 cents in the dollar while the stabilization effect is 31 cents in the dollar in canada the redistributive effect is larger 39 cents and the stabilization effect smaller 17 cents federal flows appears to depend on the institutional structure of the country concerned however in both countries the redistributive element is considerably larger than the amounts involved in the ec structural funds program as for stabilization national fiscal policies in the ec appear to have been as effective as federal governments in the united states and canada in cushioning shocks to incomes

alcohol taxes and labor market outcomes abstract we present reduced form estimates of the effect of alcohol taxes on employment weekly work hours and wages the reduced form estimates are meaningful in two ways first they provide estimates of the effect of an important public policy tool alcohol taxes and second they can be used to evaluate hypotheses about the structural effects of alcohol use on labor market outcomes estimates indicate that there is a weak and indeterminate relationship between alcohol taxes and labor market outcomes this implies that alcohol use does not adversely affect labor market outcomes and is inconsistent with findings from previous studies

the effect of alcohol use on wages 1988 the effect of alcohol use on wages applied economics vol 20 no 10 pp 1343 1351

regional non adjustment and fiscal policy asymmetric shocks regional non adjustment and fiscal policy how will countries handle idiosyncratic macroeconomic shocks under the single currency since the regional adjustment patterns currently prevailing within european currency unions are likely to prevail at the national level under the single currency looking at the ways in which european countries react to internally asymmetric shocks today provides a good preview for the answer to that question in this paper we compare the usa with germany italy and the uk and with canada which is closer to europe than the usa in its labour market and fiscal institutions europe s and to some extent canada s model of regional response differs from that of the usa changes in regional real exchange rates are small in all countries outside of the usa however there is more reliance on interregional transfer payments less on labour migration and the pace of regional adjustment appears to be slower if emu aims at the same degree of economic and social cohesion that its constituent nations enjoy today this suggests that its members may find it hard to resist the eventual extension of existing eu mechanisms of income redistribution a transfer union we propose an alternative strategy based on a relaxed stability pact further strictures against central eu borrowing labour market and fiscal reform and the issuance by individual member states of debt indexed to nominal gdp maurice obstfeld and giovanni peri

further evidence on the economic effects of poor health this paper examines variations in current economic welfare attributable to different profiles or histories of health status over the preceding ten year period a two equation model estimated with national longitudinal survey data for four sex race groups provides convincing evidence that health problems incurred in the past adversely affect current earnings this legacy is difficult to overcome it remains even for individuals in improving health willing to devote relatively greater effort to market work a history of poor health is also shown to exact substantially different economic tolls from men and women as well as from whites and blacks

factor mobility risk and redistribution in the welfare state economic integration reduces the costs of factor mobility producing efficiency gains and contributing to equalization of net factor returns this raises the cost of income redistribution policy thus threatening a basic function of the welfare state a simple model of costly factor mobility under uncertainty shows that greater factor mobility enables factor owners to pool industry specific region specific or occupation specific risks due to uncertain technology or terms of trade economic integration may thus reduce some of the potential social insurance benefits of redistributive policy

a pint a day raises a man s pay but smoking blows that gain away this paper studies the wage effects of the use of alcohol and tobacco the analysis based on a recent survey in the netherlands shows that for males the use of tobacco has a negative wage effect of about 10 while the use of alcohol has a positive wage effect of about the same size the wages of females are not affected by smoking and drinking

migration with fiscal externalities abstract this paper analyses the distribution of a country s population among regions when migration involves fiscal externalities the main question addressed is whether a decentralized decision making of regional governments can produce an optimal population distribution as recently asserted or a centralized intervention is indispensable as argued before in the literature in analysing this issue it is assumed that migration is costly and accordingly the problem is modelled in a dynamic setup it turns out that while with costless mobility the fiscal externality is fully internalized by voluntary interregional transfers with costly mobility centrally coordinated transfers still remain indispensable for achieving the socially optimal allocation

alcohol consumption smoking and wages the good health of an individual is a combination of uncontrollable factors that includes genetics and random events and controllable factors through the regulation of activities such as smoking and drinking since the work of grossman in the 1970s a significant relationship between health and earnings has been predicted in this present paper the 1995 australian national health survey is used to examine simultaneously the effects of drinking and smoking on wages to model the interaction of smoking with alcohol consumption separate models are fitted for smokers and nonsmokers these models account for potential selectivity bias resulting from the decision to smoke and endogeneity arising from a potential causal relationship between earnings and alcohol consumption

does drug use lower wages this study using microdata from the 1980 and 1984 waves of the national longitudinal survey of youth examines the effects of drug use on wages and employment contrary to most previous researcher

antisocial security the puzzle of beggar thy children policies the u s social security program has irrevocably transferred substantial wealth from workers to their ostensibly altruistic parents after some alternative explanations for this paradox are addressed a formal model is developed to show that a majority of rational voters who care about their descendants can support the preservation of current benefits for themselves but accept the prospect of social security s future retrenchment incorporating elements of tabellini s 2000 positive theory of social security and benabou and ok s 2001 analysis of income mobility the model identifies specific forces affecting this time varying individual support for social security these forces are embodied in three hypotheses related to income mobility relative income level and age an ordered logit analysis of cumulative anes data supports these hypotheses

arthritis and the earnings of men an analysis incorporating selection bias abstract arthritis is a chronic and crippling disease which affects the work effort and earnings of more than 14 million working age victims this paper examines the effects of arthritis on the earnings of men aged 18 to 64 arthritis has large and significant effects on earnings most models incorporating selection bias have examined groups with lower labor force participation rates than prime age males but significant selection bias is found here when selection bias is considered the estimated absolute effects of arthritis are increased and the percentage of the gap between arthritic and non arthritic males explained by arthritis as opposed to other factors increases this study is unusual in identifying the effects of a single disease on earnings

alcoholism work and income this article reports on an empirical analysis of the relationships between alcoholism and income and working we show that the relationships between alcoholism and labor market success have important age or life cycle dimensions we present evidence that alcoholism may affect income more by restricting labor market participation than by affecting the wages of workers finally we demonstrate that the effects of alcoholism on earnings depend on the extent to which one controls for other covariates associated with alcoholism as such we suggest that there may be important indirect as well as direct effects of alcoholism on labor market success

illicit drug use unemployment and occupational attainment in this paper we use data from the british crime survey bcs to examine the effect of illicit drug use on labour market outcomes we find very little evidence to support any relationship between drug use hard or soft and occupational attainment however we find compelling evidence to suggest that drug use particularly the use of opiates cocaine and crack cocaine is associated with an increased risk of unemployment regardless of age or gender

adolescent alcohol use sociability and income as a young adult we use data from the national longitudinal survey of adolescent health add health to study how sociability and adolescent alcohol use impact personal income as a young adult we find that factors which enhance not only individual sociability but also social interaction at the community level are positively linked to future earnings of adolescents adolescents whose friends and friends of friends have greater sociability reap long term labour market rewards into adulthood after adjusting for individual and community sociability the effect of teenage alcohol consumption on labour market earnings as young adults is reduced our results suggest that earnings premiums associated with adolescent alcohol consumption may be partially explained by social network dynamics

how prudent are consumers using data from the consumer expenditure survey this paper presents a simple test that provides an explicit estimate of the parameter in the utility function that reflects the strength of the precautionary saving motive the coefficient of relative prudence the test yields a fairly precise estimate of a small precautionary motive in fact the estimate is too small to be consistent with widely accepted beliefs about risk aversion the presence of liquidity constrained households does not appear to explain this finding and there is some evidence that self selection of households into risky environments also cannot explain the results

employment wages and alcohol consumption in russia 1 introductionconcerns regarding the relationship between alcohol consumption and labor market productivity are well grounded if problem drinking or alcoholism is considered a disease then it may have depressant effects on labor market productivity causing reductions in employment earnings and other labor market outcomes mullahy and sindelar 1993 1996 kenkel and ribar 1994 however there is a medical literature that documents a u shaped relationship between alcohol consumption and the risk of cardiovascular disease according to this literature moderate drinkers have a lower risk of cardiovascular disease than do either abstainers or heavy drinkers beaglehole and jackson 1992 doll et al 1994 consistent with this evidence several economists have found a positive association between moderate drinking and earnings berger and leigh 1988 french and zarkin 1995 heien 1996 hamilton and hamilton 1997 zarkin et al 1998 macdonald and shields 2001 this article investigates the impact of alcohol consumption on employment and wages in russia the primary contributions of the article are twofold first it enhances the economic literature on the relationship between alcohol consumption and labor market behavior by using data from a longitudinal survey the use of a longitudinal data set enables the estimation of a fixed effects model which helps avoid the potential bias caused by unobserved individual factors not captured in cross sectional models the use of a fixed effects model is an important extension to the literature because the data sets used in previous studies are cross sectional and usually lack adequate variables that could serve as identifying instruments to control for the endogeneity of alcohol consumption 1 furthermore the richness of the data set used in this article allows for the application of three alternative measures of alcohol consumption in the empirical analysis this is important because the relationship between alcohol consumption and labor market outcomes may be sensitive to the alcohol measure that is used the second notable contribution of this article is that it provides the first empirical evidence on the association between alcohol consumption and labor market outcomes in russia excessive alcohol consumption is a widespread problem in russia where per capita alcohol consumption is around 14 liters per year the world health organization who considers 8 liters to be a sign that a country has a critical consumption level for health problems quinn judge 1997 furthermore the dramatic fluctuations in mortality rates experienced in russia over the past 15 years have generated considerable attention to the potential effect of alcohol consumption on the overall health of the russian population it is important to investigate how labor market outcomes would be affected by alcohol consumption in a country which demonstrates such dramatic fluctuations in alcohol consumption and mortality consistent with the previous studies cross sectional results generally support the hypothesis of an inverse u shaped relationship between alcohol consumption and wages and employment results from the fixed effect models are found to be quite different from those of cross sectional models the positive effect of alcohol consumption on employment disappears for both males and females once the individual fixed effects are controlled for the results of the wage model lend support to a small and linear return to alcohol consumption but the effects are significant only at the 10 level the fixed effects estimates are smaller in magnitude and estimated with less precision compared with cross sectional estimates section 2 reviews the previous literature section 3 discusses the conceptual issues and empirical strategy section 4 introduces the data set section 5 provides a discussion of the results and sensitivity analyses section 6 concludes the article

alcohol and earnings does drinking yield a wage premium this paper examines the relationship between alcohol consumption and earnings for prime age males wage differentials for non moderate and heavy drinkers are estimated using a polychotomous choice model which accounts for the endogenous relationship be tween drinking and earnings we 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 non and moderate drinkers these results are in contrast to previous research on substance abuse which finds no earnings drop off for heavy users

employment unemployment and problem drinking the misuse of alcohol is estimated to result in enormous economic costs composed largely of reduced labor market productivity however there has been debate on this issue the purpose of this paper is to help to resolve this debate by presenting sound structural estimates of the relationship between measures of problem drinking and of employment and unemployment the analysis is based on the 1988 alcohol supplement of the national health interview survey we find that for both men and women problem drinking results in reduced employment and increased unemployment

regional insurance and migration a dynamic model of migration is developed to study whether labor mobility can hedge people against region specific shocks making private or public insurance redundant the model adopts a novel timing for migration which is argued to be the time frame suitable for analyzing risk sharing issues it also innovates on the existing literature by solving individual migration through convexification of the set of actions the results show that the role of migration as an insurance mechanism is small labor mobility cannot fully remove income differentials between regions it is also shown that a fiscal stabilization scheme is in general optimal moreover any pure risk sharing mechanism has no influence on migration flows

alcohol use human capital and wages this article develops and estimates a model of wage determination that isolates the effects of alcohol use on wages as mediated through human capital accumulation although generally insignificant estimation results suggest that moderate alcohol use while in school or working has a positive effect on the returns to education or experience and therefore on human capital accumulation but heavier drinking reduces this gain slightly based on these results alcohol use does not appear to adversely affect returns to education or work experience and therefore has no negative effect on the efficiency of education or experience in forming human capital