Garry F. Barrett
Abstract
The effect of alcohol consumption on the earnings of full-time male workers is analysed using the Australian National Health Survey, 1989. A multinomial logit choice model is used to explain workers' choice of drinking status and to correct for selection bias in the wage equation estimation. It is found that moderate drinking leads to a significant wage premium relative to abstention and heavy drinking. The results are consistent with moderate drinking improving individual's health and hence productivity and earnings.