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Does Drug Use Lower Wages?

This study, using microdata from the 1980 and 1984 waves of the National Longitudinal Survey of Youth, examines the effects of drug use on wages and employment. Contrary to most previous researchers' findings that illegal drug use negatively affects earnings, this analysis suggests that, once an allowance is made for self-selection effects (that is, unobservable factors simultaneously affecting wages and the decision to use drugs), drug users actually received higher wages than non-drug users. A similar analysis of employment effects shows that the sample of all drug users (which included users of “hard” and “soft” drugs) had lower employment levels than non-drug users, but the smaller sample consisting only of users of hard drugs, surprisingly, did not.