Why Do Drinkers Earn More? Job Characteristics as a Possible Link

After some initial controversy, an inverted U-shape relationship between the consumption of alcohol and income/earnings seems to be an established result, at least in North America. It has been dubbed a “drinking premium”, at least in the lower portion of the consumption curve. It is still unclear, perhaps even counter-intuitive, why such a drinking premium exists. Using a sample of 35,000 employed or self-employed individuals aged 25 to 64 and not in poor health from the 2015-16 Canadian Community Health Survey, we confirm the existence of a drinking premium and a positive return to quantity of frequency of drinking up to high levels of consumption; we also find strong returns at low levels of consumption for women, whereas for men the return becomes significant at higher levels of consumption. Building on an approach used by Adams et al. (2022) we link data to job characteristics to explore their role in explaining the correlation between drinking behaviour and income. We find that controlling for job characteristics reduces the premium or return to drinking substantially (by between one fifth and one half, depending on gender and the measure of alcohol consumption). It therefore looks like the premium is not entirely causal (drinking does not make one richer) but stems from the fact that job characteristics that increase the paycheck also induce individuals who hold these jobs to drink more