Road to perdition? The effect of illicit drug use on labour market outcomes of prime-age men in Mexico.

ABSTRACT

This research addresses the impact of illicit drug use on labour market outcomes of men in Mexico. We leverage statistical information from three waves of a comparable national survey and make use of the Lewbel's heteroskedasticity-based instrumental variable strategy to deal with the endogeneity of the drug consumption. Our results suggests that drug consumption has fairly negative effects in the Mexican context it reduces employment, occupational attainment and formality and raises unemployment of local males. These effects seem larger than those estimated for high-income economies.