Illicit Drug Use, Employment, and Labor Force Participation.

• Author: French, Michael T.
• Position: Statistical Data Included

Michael T. French [*]

M. Christopher Roebuck [+]

Pierre Kebreau Alexandre [+]

Illicit drug use has declined among the U.S. adult population, but national surveys show the majority of illicit drug users are employed. Concern about workplace productivity, absenteeism, and safety has led many employers to establish employee assistance and drug testing programs. Given the sharp interest in workplace interventions, more information is needed about the relationships between drug use and labor market status. This study estimated the probability of employment and labor force participation for different types of drug users using nationally representative data from the 1997 National Household Survey on Drug Abuse. Results strongly indicated that chronic drug use was significantly related (negative) to employment for both genders and labor force participation for males. Furthermore, nonchronic drug use was not significantly related to employment or labor force participation. These findings suggest that workplace policies for illicit drug use should consider chronic or problem drug users apart fro m light or casual users.

1. Introduction

   Illicit drug abuse often leads to significant personal and social consequences, including labor market problems (Harwood, Fountain, and Livermore 1998). Casual drug use (vs. chronic drug use or drug abuse), however, has uncertain effects on job performance, especially when consumption occurs away from the workplace and a relatively lengthy period of time has elapsed between consumption and work. A growing body of literature has examined the relationships between drug use, drug abuse, and labor market measures (for recent reviews, see French 1993; Kaestner 1998). The majority of these studies have focused on wages and earnings (e.g., Kaestner 1991, 1994a; Gill and Michaels 1992; Kandel, Chen, and Gill 1995; French and Zarkin 1995; Heien 1996; Buchmueller and Zuvekas 1998; French, Zarkin, and Dunlap 1998). Researchers have also examined the relationships between substance use and labor supply measures such as employment status, labor force participation, annual weeks employed, or daily hours worked (e.g., Regis ter and Williams 1992; Kaestner 1994b; Mullahy and Sindelar 1996; Buch-mueller and Zuvekas 1998; Zarkin et al. 1998; French et al. 2001). In general, the labor supply results are inconsistent across studies.

   Although the existing literature suggests that the relationships between drug use and wages are complex and perhaps ambiguous (Normand, Lempert, and O'Brien 1994; Kaestner 1998), the principal workplace impact may involve employment status and labor supply rather than earnings per se (Mullahy and Sindelar 1996; French et al. 2001). One of the most ambitious studies of substance use and employment status was by Mullahy and Sindelar (1996). These authors derived various estimates of the effects of problem drinking on employment and unemployment. [1] Specifically, they first estimated the relationships with ordinary least squares (OLS, linear probability model) and then with an instrumental variables (IV) approach. [2] Using the 1988 Alcohol Supplement of the National Health Interview Survey, they found that problem drinking was associated with lower employment and higher unemployment for males (OLS). In contrast, female problem drinkers were more likely to be both employed and unemployed (OLS). The IV results w ere consistent in sign with the OLS results for males, but the IV estimates were not statistically significant for any of the problem drinking definitions. For females, the IV findings were different from the OLS findings regarding employment, but the coefficient estimates were not significant. [3]

   The research by Mullahy and Sindelar (1996) was a significant contribution to the literature because it was one of the first studies that estimated the association between substance use and employment status. The authors developed several measures of alcohol use and used an IV technique to control for the endogeneity of problem drinking. Despite these notable features, the study can be extended and modified in several ways. For example, no recent studies have used national surveys of the adult household population to examine the relationships between illicit drug use and labor market status. Second, Mullahy and Sindelar did not examine labor force participation or different measures of alcohol use in the same specification. Moreover, none of the coefficient estimates for problem drinking in the IV models used by Mullahy and Sindelar was significant, which could indicate the need to secure better instruments. As noted by the authors, "... econometric evidence presented here must be weighed carefully in light o f the reasonableness of the identifying restrictions invoked to estimate such models" (p. 432). Mullahy and Sindelar then proceeded to encourage additional research in this area with new data sets and improved measures.

   The present article is an extension of earlier studies (particularly Mullahy and Sindelar 1996) and a contribution to the growing literature on the economic effects of drug use. Specifically, the analysis focused on employment and labor force participation. [4] Second, chronic drug use was examined rather than problem drinking. Third, data were obtained from a recent national survey, the 1997 National Household Survey on Drug Abuse, with excellent measures of drug use and labor market status. Finally, nonchronic drug use was examined along with chronic drug use to determine whether the labor supply effects extended to any type of drug use.

   The rest of the article is organized as follows. Section 2 presents theoretical background for the study. Section 3 introduces the empirical models. The sample and data are explained in section 4. The results are presented in section 5, and the article concludes with a discussion (section 6).

2. Theoretical Background

   Several theoretical or conceptual issues require careful consideration when investigating the relationships between illicit drug use and labor market behavior. For example, the direction of causality is complicated and uncertain. Does drug use lead to employment problems or does a lack of employment foster drug use? Empirically, however, the data requirements (e.g., longitudinal data with good price information and other instrumental variables) that are necessary to statistically address this issue are often beyond the reach of most investigators.

   A completely different but equally important conceptual issue concerns the definition of drug use. Regarding a legal substance such as alcohol, most investigators recognize that a binary measure of alcohol use would be inappropriate because light or occasional use may actually be beneficial rather than problematic (Shaper 1990; Marmot and Brunner 1991; Coate 1993; French and Zarkin 1995; Heien 1996; Kannel and Ellison 1996). Illicit drug use is generally viewed differently than alcohol, and investigators often estimate relationships between any illicit drug use and health or labor market consequences (Kaestner 1991; Gill and Michaels 1992). Only recently have studies begun to measure the quantity/frequency dimensions of use and distinguish between the use of different types of illicit drugs (Buchmueller and Zuvekas 1998; French et al. 2000; McGeary and French 2000). The present article follows the increasing emphasis on problematic drug use by examining chronic drug users relative to nonchronic drug users and nonusers.

   The measurement of employment is also important for a study of drug use and labor market status. Most survey questionnaires record employment status at the time the interview is administered. But, defined in this manner, employment status may be misrepresented for individuals who worked continuously for several months and then stopped working at the time of the interview. Alternatively, some individuals may secure a job shortly before the interview and be designated as employed even though they worked little during the preceding months. Similar issues may exist for measurement of labor force participation. Consider an individual who continuously worked for several months, became unemployed, and had not looked for work during the past 30 days prior to the interview. This person would be classified as not in the labor force. Although these measurement concerns probably only apply to a small percentage of survey respondents, it is important to recognize that changes in variable definitions and the timing of surv ey administration could have an impact on the empirical findings.

   The present analysis considers two measures of illicit drug use (based on consumption over the prior 12 months) and two measures of labor market status (pertaining to the time of survey administration). To guide the empirical work that follows, the conceptual framework advanced by Mullahy and Sindelar (1996) is adapted. Specifically, assuming that product and input markets are competitive and individuals are price and wage takers, the implicit functions for drug use (D) and labor market status (L) can be specified as

   D = D(p, w, [X.sub.D], [[alpha].sub.D]) (1)

   L = L(p, w, [X.sub.L], [[alpha].sub.L]), (2)

   where p is a vector of all prices, w is a vector of all wages, [X.sub.D] and [X.sub.L] are vectors of all observable factors (e.g., demographics, human capital, health status, geographic controls) that influence D and L, and [[alpha].sub.D] and [[alpha].sub.L] are vectors of unobservable characteristics that are related to D and L. In addition to p and w, other common variables are likely present in the X's and [alpha]'s across Equations 1 and 2.

   Structural equations for D and L can be derived through a static utility maximization model of drug use and leisure subject to a full budget constraint. A flexible form of the utility function is assumed whereby preferences for drug use and leisure are implicitly separable from other prices (Browning, Deaton, and Irish 1985...