Journal of Labor Research

, Volume 30, Issue 3, pp 219–244 | Cite as

In Vino Pecunia? The Association Between Beverage-Specific Drinking Behavior and Wages

Article

Abstract

The positive association between moderate alcohol consumption and wages is well documented in the economic literature. Positive health effects as well as networking mechanisms serve as explanations for the “alcohol–income puzzle.” Using individual-based microdata from the SOEP for 2006, we confirm that this relationship exists for Germany as well. More importantly, we shed light on the alcohol–income puzzle by analyzing, for the first time, the association between beverage-specific drinking behavior and wages. In our analysis, we disentangle the general wage effect of drinking into diverse effects for different types of drinkers. Mincerian estimates reveal significant and positive relationships between wine drinkers and wages as well as between multiple beverage drinkers and wages. When splitting the sample into age groups, the “drinking gain” disappears for employees under the age of 35 and increases in size and significance for higher age groups. We also find a “beer gain” for the oldest age group and male residents of rural areas as well as a “cocktail gain” for residents of urban areas. Several explanations for our empirical results are discussed in view of the likelihood that the alcohol–income puzzle is a multicausal phenomenon.

Keywords

Alcohol–income puzzle Beverage-specific drinking behavior Wages Wine Socio-Economic Panel Study (SOEP) 

JEL Classification

I10 I12 J30 J31 

Notes

Acknowledgements

We would like to thank the editor, an anonymous referee, Eva M. Berger, Eberhard Feess, Joachim R. Frick, Daniela Glocker, John P. Haisken-DeNew, Peter Haan, Martin Karlsson, Michael Kvasnicka, Cathérine Müller, Tom Siedler, Victor Steiner, Marc Vothknecht, Gert G. Wagner as well as the seminar participants at the 23rd Annual Congres of the European Economic Association, the 22nd Annual Conference of the European Society for Population Economics, the SOEP Brown Bag, and the Berlin Network of Labour Market Researchers (BeNA) for their helpful comments and discussions. A special thank goes to Deborah Bowen who helped us with the title and did the proofreading. Financial aid from the Stiftung der Deutschen Wirtschaft (sdw, Foundation of German Business) is gratefully acknowledged. All remaining errors are our own.

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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Socio-Economic Panel Study (SOEP), Graduate Center of Economic and Social ResearchGerman Institute for Economic Research (DIW) BerlinBerlinGermany
  2. 2.Socio-Economic Panel Study (SOEP)German Institute for Economic Research (DIW) BerlinBerlinGermany
  3. 3.University of Technology Berlin (TU Berlin)BerlinGermany

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