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

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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.

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Notes

  1. However, it might be argued that seldom drinkers would be more appropriate as reference group since abstainers may be a negative selection with respect to labor market outcomes. The proportion of ex-alcoholics or people with severe illnesses is certainly higher in this subsample. In sensitivity analyses, we checked whether the choice of the reference group makes a substantial difference in our results which is not the case.

  2. We conducted a battery of standard tests on the presence of heteroskedasticity and found evidence for the presence of arbitrary heteroskedasticity. Consequently, in the following, we use robust standard errors in all empirical specifications.

  3. However, the estimates are available upon request from the authors.

  4. As the IV estimates rely on people in a partnership who might represent a positive selection with respect to labor market outcomes, we repeated our OLS estimates with that subsample. The drinking coefficients increased but remained smaller than in the IV case.

  5. In East Germany: up to 20,000 inhabitants.

  6. For the sake of saving space, we do not report the results here. These can be provided by the authors upon request.

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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.

Author information

Authors and Affiliations

  1. Socio-Economic Panel Study (SOEP), Graduate Center of Economic and Social Research, German Institute for Economic Research (DIW) Berlin, Mohrenstraße 58, D-10117, Berlin, Germany

    Nicolas R. Ziebarth

  2. Socio-Economic Panel Study (SOEP), German Institute for Economic Research (DIW) Berlin, Mohrenstraße 58, D-10117, Berlin, Germany

    Markus M. Grabka

  3. University of Technology Berlin (TU Berlin), Berlin, Germany

    Nicolas R. Ziebarth & Markus M. Grabka

Authors
  1. Nicolas R. Ziebarth
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  2. Markus M. Grabka
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Corresponding author

Correspondence to Nicolas R. Ziebarth.

Appendices

Appendices

Appendix 1

The GSOEP group asked the following questions in 2006 for the first time.

How often do you drink the following alcoholic beverages?

  1. 1.

    Beer

    1. (a)

      Regularly

    2. (b)

      Occasionally

    3. (c)

      Seldom

    4. (d)

      Never

  2. 2.

    Wine, Champagne

    1. (a)

      Regularly

    2. (b)

      Occasionally

    3. (c)

      Seldom

    4. (d)

      Never

  3. 3.

    Spirits (hard liquor, brandy etc.)

    1. (a)

      Regularly

    2. (b)

      Occasionally

    3. (c)

      Seldom

    4. (d)

      Never

  4. 4.

    Mixed drinks (cocktails, alcopops etc.)

    1. (a)

      Regularly

    2. (b)

      Occasionally

    3. (c)

      Seldom

    4. (d)

      Never

Appendix 2

Table 12 Definition of variables and summary statistic
Full size table

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Ziebarth, N.R., Grabka, M.M. In Vino Pecunia? The Association Between Beverage-Specific Drinking Behavior and Wages. J Labor Res 30, 219–244 (2009). https://doi.org/10.1007/s12122-009-9064-7

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  • DOI: https://doi.org/10.1007/s12122-009-9064-7

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