Wage Effects of Drinking in Australia

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Abstract

This article analyses the wage effects of drinking using the Australian Twin Registry data. A multinomial logit framework is employed to explain the allocation of workers across various drinking states, and to correct for selection bias in the wage equations. It is found that there is a significant positive wage premium for moderate drinking. A favourable family background (during childhood) is positively related to the measure of moderate drinking. Greater genetic endowments are also associated with moderate drinking.

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