Employment, Unemployment, and Problem Drinking

The misuse of alcoholic beverages ('problem drinking') has been demonstrated to result in enormous economic costs; most of these costs have been shown to be reduced productivity in the labor market. The purpose of this paper is to present sound structural estimates of the relationship between various measures of problem drinking and of employment and unemployment. The sample of approximately 15,000 observations is drawn from the 1988 Alcohol Survey of the National Health Interview Survey, the first dataset that enables nationally- representative estimates of alcohol abuse and dependence consistent with generally accepted medical criteria. The structural estimates of the effects of problem drinking on employment and labor market participation are obtained using methods proposed by Amemiya and by Heckman and MaCurdy. For our sample of males ages 25 to 59, we find that using the instrumental variable approach suggests that the negative impact of problem drinking on employment is even greater than that estimated using the OLS approach. Interestingly, the IV estimates on the samples of females change the sign from a positive impact of problem drinking on employment to a negative impact. Thus although the conclusions drawn from raw data comparisons and OLS regressions differ by gender, the IV estimates are very similar for men and women. For women, the unobserved heterogeneity masks the negative impact of problem drinking on employment when using OLS estimation methods.

Health, Income, and Risk Aversion: Assessing Some Welfare Costs of Alcoholism and Poor Health

The economic costs of adverse health outcomes have typically been evaluated in a context of risk neutrality, an approach that ignores the potential welfare importance of individuals' risk preferences. This paper presents a framework that unifies the research in health capital and earnings with that on risk preferences in the presence of stochastic outcomes. The model is implemented to obtain estimates of the economic damages due both to general health problems as well as to one specific health problem that is of considerable interest from society's perspective: alcoholism. Our empirical findings, based on data from the Epidemiologic Catchment Area survey, indicate that failure to recognize the possibility of risk averse preferences leads to a potentially serious underestimation of the magnitudes of the 'costs' of alcoholism and poor health. In particular, it is shown that while alcoholism problems have negative impacts on the conditional mean of income (consistent with most of the existing literature), they also have positive impacts on the conditional variance of income. Our conclusions are to some degree provisional because our estimates of conditional variances are necessarily biased to the extent that unobserved heterogeneity is an important determinant of the moment structure of income in our sample.

Cumulative Effects of Job Characteristics on Health

We present what we believe are the best estimates of how job characteristics of physical demands and environmental conditions affect individual’s health. Five-year cumulative measures of these job characteristics are used to reflect findings in the physiologic literature that cumulative exposure is most relevant for the impact of hazards and stresses on health. Using data from the Panel Study of Income Dynamics we find that individuals who work in jobs with the ‘worst’ conditions experience declines in their health, although this effect varies by demographic group. For example, for non-white men, a one standard deviation increase in cumulative physical demands decreases health by an amount that offsets an increase of two years of schooling or four years of aging. Job characteristics are found more detrimental to the health of females and older workers. These results are robust to inclusion of occupation fixed effects, health early in life and lagged health.Health, occupational characteristic

The Impact of Job Stress on Smoking and Quitting: Evidence from the HRS

This paper examines the impact of job-related stress on smoking behavior. We use data from the Health and Retirement Study to examine how high job stress affects the probability that smokers quit and the number of cigarettes smoked for current smokers. We include individual fixed effects, which control for time-invariant factors. Occupational fixed effects are also included to control for occupational characteristics other than stress; time dummies control for the secular decline in smoking rates. Using a sample of people who smoked in the previous wave, we find that job stress is positively related to continuing to smoke and to the number of cigarettes smoked for current smokers. The FE results are of greater magnitude and significance than the OLS results suggesting an important omitted variable bias in OLS estimates. It may be that individuals who are able to handle stress or have better self-control are more likely to have high stress jobs and less likely to smoke. We also find that the smoking/stress relationship is neither explained by heterogeneity across individuals in cognitive ability, risk taking preferences or planning horizons nor is it explained by time varying measures that we observe.

Estimating Causal Effects of Early Occupational Choice on Later Health: Evidence Using the PSID

In this paper, we provide some of the first empirical evidence of whether early occupational choices are associated with lasting effects on health status, affecting individuals as they age. We take advantage of data on occupational histories available in the Panel Study of Income Dynamics (PSID) to examine this issue. To the PSID data, we merge historical Census data that reflect the labor market conditions when each individual in the PSID made his first occupational choice. These data on labor market conditions (e.g. state-level share of blue collar workers) allow us to instrument for occupational choice in order to alleviate endogeneity bias. We use parental occupation as additional instruments. Since our instruments may have indirect effects on later health, we also control for respondent’s pre-labor market health, education and several family and state background characteristics in order to make the instruments more plausibly excludable. We find substantial evidence that a blue collar occupation at labor force entry is associated with decrements to later health status, ceteris paribus. These health effects are larger after controlling for endogeneity and are similar across sets of instruments. We also find differences in the effects of occupation by gender, race, and age.

Economic Costs of Influenza-Related Work Absenteeism

AbstractBackgroundInfluenza vaccinations are currently advocated only for individuals over age 50. However, vaccination of all working-age people may be warranted based on reduced absenteeism from work.ObjectiveThis study aims to quantify the association between lost workdays and influenza, controlling for other factors. A secondary aim of the study is to assess the net benefit of expanded vaccination in a workplace setting.Research DesignMultivariate regression analyses of the 1996 Medical Expenditure Panel Survey Household Component are used to estimate the number of workdays missed because of influenza-like illness (ILI) when controlling for other health, demographic, and employment factors. Mean productivity costs are measured in terms of absences from work and valued in dollar terms. The net benefit of influenza vaccination is estimated using a simple decision analysis.Subjects and MeasuresHealth, demographic, and employment data for employed individuals between the ages of 22 and 64 years are analyzed.ResultsThe average number of workdays missed due to ILI was 1.30 days, and the average work loss was valued at $137 per person. The vaccine strategy was not preferred in the baseline analysis; however, this result was sensitive to assumptions regarding the incidence of influenza, the cost of delivering the vaccine, and the productivity impact of worker absenteeism. Moreover, nonproductivity benefits of vaccination were omitted.ConclusionsThe economic attractiveness of expanded investment in influenza vaccination hinges on employer- and population-specific assumptions. Our analysis provides a simple framework within which competing considerations of disease epidemiology, worker productivity, and economic cost may be weighed

Impact of First Occupation on Health at Older Ages

Occupation is discussed as a social determinant of health. Occupation has received little attention in this light in the economics literature. We examine occupation in a life-course framework and use measures of first-occupation, initial health, and mother’s education. We contend that first occupation is a choice made relatively early in life that affects health outcomes at later ages. We examine first-occupation for two reasons: 1) there is growing evidence that early determinants affect later health and occupation has received little attention in this regard and 2) first occupation is predetermined in analysis of later health, which helps to address the issue of potential simultaneity. Using data from the Panel Study of Income Dynamics (PSID) we estimate the impact of initial occupation on two measures of health later in life: respondent-reported fair/poor health and ever suffering a heart attack. The PSID offers the opportunity to examine a lifecycle perspective as we can examine the impact of early occupation on later health while controlling for several predetermined conditions such as mother’s education and health in youth. Estimates suggest that first-occupation has a durable impact on later health, ceteris paribus, but that the impact varies by health measure and the set of control variables in regression specifications. Early choice of occupation could be a critical factor in successful aging and this information may pave the way to developing more effective workplace and public policies to improve health in older ages.

Tobacco Spending and its Crowd-Out of Other Goods

Smoking is an expensive habit. Smoking households spend, on average, more than $1000 annually on cigarettes. For households in which some members smoke, smoking expenditures crowd-out other purchases, which may affect other household members, as well as the smoker. We empirically analyze how expenditures on tobacco crowd out consumption of other goods, estimating the patterns of substitution between tobacco products and other expenditures. We use the Consumer Expenditure Survey (1995 to 2001), which we complement with regional price data, and state cigarette prices. We estimate a consumer demand system of expenditures on cigarettes, food, alcohol, housing, apparel, transportation, medical care and controls for socio-economic variables and other sources of observable heterogeneity. Descriptive data indicate that, compared to non-smokers, smokers spend less on housing. Results from the demand system indicate that as the price of cigarettes rises, households increase the quantity of food purchased, and, in some samples, reduce the quantity of apparel and housing purchased.

Tobacco Use, Taxation and Self Control in Adolescence

Recent literature has suggested that higher taxes on addictive goods could increase welfare by assisting individuals with self control problems and trouble resisting 'temptation’. In contrast, if individuals continue to use despite increased prices, taxation may serve to reduce the welfare of these individuals while providing no benefits in managing self control nor mitigating externalities. We use data on adolescents from the National Longitudinal Study of Adolescent Health (Add Health) to examine the impact of tobacco taxes on smoking. To account for unobserved heterogeneity in response to taxes we estimate finite mixture models, positing two types of individuals with differential responses to taxes. We find evidence of differential price elasticity for tobacco use across the adolescents groups, and show that individuals with low self control or high discount rates are largely unresponsive to cigarette price. Those who have the least willpower may need the most help in quitting but are unresponsive to taxes, suggesting that policies other than taxation may be needed to reduce adolescent tobacco use.