published in: Southern Economic Journal, 2004, 71 (2), 397-417
This paper examines the effects of alcohol consumption on employment and wages for males
and females in Russia. Both cross sectional and fixed-effects models are estimated utilizing
data from the Russia Longitudinal Monitoring Survey. The results from the models that do not
control for unobserved heterogeneity indicate that alcohol consumption has a positive impact
on employment and wages. Further, there is some evidence in favor of an inverse U-shaped
relationship between alcohol consumption and the labor market outcomes. Once the
unobserved heterogeneity is controlled for using fixed effects, the positive association
diminishes for the employment models for males and females. For the wage models,
controlling for unobserved heterogeneity strengthens the positive impact of alcohol
consumption both in significance and magnitude for males, while the reverse is true for
females. However, the inverse U-shaped relationship obtained in cross-sectional models no
longer exists. The results underline that unobserved heterogeneity plays an important role on
the relationship between alcohol consumption and labor market behavior for both males and
females. The findings are robust to model specifications and various alcohol consumption
measures.
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