Influence of Alcohol Consumption on Employment and Wages in Russia

Abstract

This paper examines the influence of alcohol consumption on employment, work ing hours and income of workers on Russian labor market using the data from the Russia Longitudinal Monitoring Survey (RLMS) from 2007 to 2009. For the purpose of correct ing for endogeneity of alcohol consumption and estimation of complex influence of alcohol consumption on the position of the individual on the labor market the system of simultaneous equation was used. Estimates of the coefficients received using a method of maximum simulated likelihood. The result shows that moderate drinkers have higher probability of employment, work more hours and have higher income than abstainers or heavy drinkers. However heavy drinking for males has a negative effect on labor market relative to abstention and moderate drinking reducing probability of employment, hours of work and income. For females heavy drinking is positively connected with income and hours of work relative to abstention, but leads to lower probability of employment.