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Binge Drinking and Labor Market Success: A Longitudinal Study on Young People

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Author Info
Keng, Shao-Hsun
Huffman, Wallace
Abstract

This paper presents a two equation model of joint outcomes on an individual’s decision to binge drink and on his/her annual labor market earnings. The primary data source is the 1979 cohort of the National Longitudinal Survey of Youth (NLSY79), 19791994. We show that binge drinking behavior is quite alcoholprice responsive and is a rational addiction. A new result is that an individual’s decision to binge drink has a statistically significant negative effect on his/her earnings. Furthermore, we conducted simulations of the shortrun and longrun impacts of increasing the alcohol price. They showed that that the tendency for an individual to binge drink heavily is reduced significantly, and the reduction is greater in the long than shortrun simulation. Also, an individual’s annual earnings were increased. However, in the structural model, an individual’s earnings have no significant effect on his/her tendency to engage in binge drinking. Our results contradict earlier findings from crosssection evidence that showed increased alcohol consumption raised an individual’s earnings or wages.

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Publisher Info
Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12299.

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Date of creation: 25 Apr 2005
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Publication status: Published in Journal of Population Economics, February 2007, Vol. 20, pp. 35-54.
Handle: RePEc:isu:genres:12299

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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Related research
Keywords: binge drinking; earnings; rational addiction; health; labor productivity; panel data;

Find related papers by JEL classification:
J1 - Labor and Demographic Economics - - Demographic Economics
J2 - Labor and Demographic Economics - - Demand and Supply of Labor

References listed on IDEAS
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    Other versions:
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  17. Currie, Janet, 2000. "Child health in developed countries," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 19, pages 1053-1090 Elsevier. [Downloadable!] (restricted)
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  20. Amemiya, Takeshi, 1974. "Multivariate Regression and Simultaneous Equation Models when the Dependent Variables Are Truncated Normal," Econometrica, Econometric Society, vol. 42(6), pages 999-1012, November. [Downloadable!] (restricted)
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