Drinking Your Way To The Top

Perhaps the result of conversations over beer during many happy hours for economics graduate students, there's been a good bit of research done on the impact of drinking on wages. The main results seem to point to a wage premium for drinkers when compared to workers who abstain. The latest issue of Applied Economics (Vol. 36, No. 26, p. 2299-2315) reports the results of the latest addition to the literature on the wage premium for drinkers. Bethany Peters finds additional evidence that supports the wage premium (as much as 20-25% more than non-drinkers) received by drinkers over non-drinkers.

The graph shows that for the model when no controls are included, the drinking premium is even higher for females. The models with fixed effects included however dampen the drinking premium (this might be because for this model permanent abstainers as well as permanent drinkers were dropped from the sample). More important, the comparison of permanent drinkers with permanent abstainers points to an unambiguous positive wage premium for the former. This is not to say that drinking is the reason why their wages are higher but perhaps some productive characteristics are associated with people who drink moderately (i.e. they might be more sociable and thus, work well with colleagues). I remember my heavy drinking days as a government employee heck, my and my drinking buddies' wages were not higher than those who didn't drink but it sure made for fun times after office hours.