Off-farm work and cigarette and alcohol expenditure among rural households

Abstract

Although the effects of off-farm work have been widely estimated, little is known about how off-farm work affects cigarette and alcohol consumption in rural areas. This study fills the research gap by investigating how off-farm work participation and intensity affect cigarette and alcohol expenditure. Off-farm work intensity is captured by the time (months) rural household heads allocated to off-farm work and off-farm income. We employ a conditional mixed process model to address the endogeneity issue of off-farm work variables and estimated survey data collected from 1,487 farm households in China. The results show that farmers’ off-farm work participation significantly increases the total cigarette and alcohol expenditure by 52.7 yuan/capita per week. Off-farm work participation significantly increases cigarette expenditure by 63.1 yuan/capita per week, but it does not affect rural households’ alcohol expenditure. We also find that the time rural household heads allocated to off-farm work does not significantly impact rural cigarette and alcohol consumption. Off-farm income significantly increases rural households’ alcohol expenditure rather than cigarette expenditure. Increased spending on cigarettes and alcohol may have health implications for individuals and social consequences for communities, affecting productivity, health care costs, and social cohesion.