This study used data from a community-based survey administered in 1996-1997 to analyze the effects of chronic drug use on labor supply, while addressing the potential endogeneity of drug use. A measure of chronic drug use was constructed to classify individuals who consumed an illicit substance at least once a week during the past year. The labor supply variables included employment during the past 30 days, labor force participation during the past 30 days, and number of weeks worked during the past 12 months. The first two measures entered the analysis as binary variables and the last measure as a continuous variable. The potential sample selection problem associated with the weeks worked variable was also addressed. Given the significant gender differences in substance use patterns and labor market behavior, separate models were estimated for males and females. Results of specification tests indicated that drug use was exogenous in the labor force participation and weeks worked equations for males, but endogenous in the employment equation for males and all three equations for females. To correct for the endogeneity of drug use in the appropriate equations, the analysis used an instrumental variables (IV) procedure. Corrections for sample selection bias were not necessary. The IV results indicated that, for both men and women, chronic drug use was (significantly) negatively related to employment, labor force participation, and number of weeks worked. Suggestions for future studies and policy implications of the findings are formulated and discussed.
Learning Objectives: At the conclusion of the session, the participant will be able to: 1. Develop an understanding of the relationships between chornic drug use and labor market activities. 2. Assess the type of information necessary for an economic analysis of the effects of drug use on labor supply. 3. Describe some of the advanced econometric techniques used in examining the relationships between drug use and labor market activities
Keywords: Drug Use, Labor
Presenting author's disclosure statement:
Organization/institution whose products or services will be discussed: None
I have a significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.
Relationship:
Two grants from the National Institute on Drug Abuse (P50 DA10236 and R01 DA11506)