Employment, Wages, and Alcohol Consumption in Russia

This article investigates the association between alcohol consumption and labor market outcomes in Russia, using data from the Russian Longitudinal Monitoring Survey (RLMS). It estimates cross-sectional and fixed effects models of the impacts of alcohol consumption on employment and wages for males and females using three different measures of drinking. The cross-sectional findings indicate that alcohol consumption has an inverse U-shaped impact on employment and wages for females. The impact on males appears to be positive but the inverse-U shape is less pronounced. Once the unobserved individual heterogeneity is accounted for using fixed effects, alcohol consumption is found to have no significant effect on employment for either males or females. The fixed effect wage models indicate that alcohol consumption has a small, positive, but linear impact on the wage rate for both males and females. Models including fixed effects generate estimates that are smaller in magnitude compared with those of cross-sectional models. The findings are robust to several diagnostic checks.