Examining the Role of Personal Problems in Determining Income

Abstract

The goal of this dissertation is to both theoretically and empirically examine how various personal problems affect income. The analysis will specifically examine the effects of divorce, alcohol use, misuse of legal drugs, and illegal drug use on income. We look at the factors affecting each of the personal problems individually and how these personal problems also affect income. By using a simultaneous equations approach, we find that, although these personal problems do not have the largest effect on income, they do have a substantial impact and therefore should not be left out of wage and income determination models.