Working Paper: NBER ID: w3535
Authors: Robert Kaestner
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.
Keywords: illicit drug use; wages; young adults; cocaine; marijuana
JEL Codes: I12; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased use of marijuana or cocaine (K42) | higher wages (J39) |
| higher wages (J39) | increased use of marijuana or cocaine (K42) |
| drug use (I12) | wages (J31) |