Minimum wages and alcohol consumption: Evidence from Canadian longitudinal microdata

Abstract

Objective

The objective is to estimate the effect of provincial minimum wage increases in Canada on heavy drinking, binge drinking and average daily alcohol consumption.

Method

We estimate standard regression models by gender-age group with drinking behaviours as the dependent variables and the minimum wage among the independent variables. We employ the Canadian National Population Health Survey which began in 1994 and ended in 2011, a period comparable to that used by many U.S. studies. The longitudinal feature of the Canadian microdata is an advantage over most U.S. datasets, allowing control for individual fixed effects, including unobserved propensities regarding alcohol. As in U.S. studies, estimation relies on differences in timing and size of minimum wage changes across jurisdictions.

Results

We find no consistent evidence that minimum wage increases increase drinking overall. Indeed, for less-educated males ages 26–64, we estimate that a $1 increase (about 15 %) in the real minimum wage would have reduced the prevalence of heavy drinking by 2.2 percentage points and average daily alcohol consumption by 0.15 standard drinks, with wild bootstrap 95 % confidence intervals (-4.3, −0.1) and (-0.28, −0.07) respectively. Our estimates for females are less consistent but some point towards modest increases in drinking.

Conclusions

Besides our strongest finding of no evidence that minimum wages increase drinking overall, our findings can also be seen as consistent with earlier research on this same Canadian dataset that found minimum wage increases reduced stress in less-educated male workers.