The relationship between alcohol use and earnings

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Volume Title
School of Economics | Master's thesis
Date
2011
Major/Subject
Economics
Kansantaloustiede
Mcode
Degree programme
Language
en
Pages
82
Series
Abstract
The link between individual earnings and alcohol use has never been investigated in Finland. The aim of this thesis is to add a missing piece into the existing alcohol use literature by providing the first study on this matter. The study is based on an empirical analysis that utilizes data from the Finnish Drinking Habits Survey 2008. Individual earnings information has been connected to the survey data from the national taxation register. The empirical analysis is conducted using multiple separate OLS-models to account for different aspects of the alcohol-earnings relationship. According to the results of the analysis, alcohol use is strongly correlated with earnings and several interesting findings were made. First, drinkers earn more than abstainers. Second, the relationship between alcohol use and earnings follows an inverse u-shaped path, with peak earnings taking place at 2.6 drinks per day for men and at 1.2 drinks per day for women. In addition, the number of intoxication is negatively correlated with earnings for men, but the same correlation does not exist for women. The results revealed that alcohol-earnings relationship also differs between socioeconomic positions and different drinker types. Wine drinkers earn 5 percent more than beer drinkers and 15 percent more of generic drinkers and some indication about the beneficial effects of drinking in a social manner was also found. Overall, the results indicate that those who drink moderately earn the most.
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Keywords
econometrics, ekonometria, health economics, terveystalous, labour market, työmarkkinat, microeconomics, mikrotalous, social capital, sosiaalinen pääoma, incomes, tulot, alcohol, earnings, human capital, ordinary least squares, age-earnings profile, socioeconomic status, bevarages
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