Illicit drug use and labour market participation: evidence of simultaneity

Abstract

Empirical research into the relationship between illicit drug use and labour market success has been found to have mixed results in the literature. The relevant sources of variability are the methods used to account for the potential endogeneity of drug use. This article utilizes clinical data for drug use and a recursive simultaneous equations approach as an alternative method for estimating the effect of consumption on labour participation and as a means for controlling for the endogeneity problem. Our results confirm that drug use is endogenously determined, and provide evidence to support the thesis that frequent use of dependency drugs greatly decreases the likelihood of being employed.

Keywords:

• illicit drug use
• endogeneity
• labour participation

JEL Classification:

• I10
• J24