The Effect of Illicit Drug Use on the Wages of Young Adults

47 Pages Posted: 7 Jul 2004 Last revised: 30 Aug 2021

See all articles by Robert Kaestner

Robert Kaestner

University of Chicago; National Bureau of Economic Research (NBER)

Date Written: December 1990

Abstract

This paper examines the effects of cocaine and marijuana use on the wages of a sample of young adults drawn from the NLS Youth Cohort. The endogeneity of drug use in a wage equation is considered and a 2SLS procedure is implemented. The rather surprising results suggest that for this sample, increased use of marijuana or cocaine is associated with higher wages. The positive relationship between drug use and the wage does not diminish with age, but remains substantially positive. We also investigate whether systematic differences in the return to measures of human capital investments can explain the observed positive relationship between drug use and wages. The results from this analysis do not support such a hypothesis.

Suggested Citation

Kaestner, Robert, The Effect of Illicit Drug Use on the Wages of Young Adults (December 1990). NBER Working Paper No. w3535, Available at SSRN: https://ssrn.com/abstract=226847

Robert Kaestner (Contact Author)

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