Substance use and labour market nexus in South Africa

Abstract

Substance abuse is a major public concern for the entire world. Using data from the National Income Dynamic Study wave four, this study examines the impact of substance (alcohol and tobacco) consumption on labour market outcomes in South Africa using the multinomial endogenous switching regression technique. This method controls for any potential selection bias and endogeneity problems. The results from the study reveal that individuals’ decisions to consume alcohol only, tobacco only, and a combination of both are driven by socioeconomic, health, and demographic factors. The estimated causal effect shows that substance use reduces individuals’ earnings in almost all cases and increases working hours. The findings suggest that efforts to control the use of alcohol and tobacco in South Africa should focus more on sensitization programmes that address the health, psychological, and economic implications of using these substances.