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The economic cost of teen drinking: late graduation and lowered earnings

  • Francesco Renna

    (Department of Economics, The University of Akron, USA)

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    This paper analyzes the effect that binge drinking has on the probability of graduating on time from high school and on future earnings. The analysis is conducted on students in their senior year of high school using data from the National Longitudinal Survey of Youth 1979. Importantly, the usual instruments used to correct for the endogeneity of the drinking variable are found to be robust only for women. This paper finds that heavy drinking decreases the probability of graduating on time. Binge drinking does not have a direct impact on adults' labor earnings, but graduating late results in lower labor income. Because of a late graduation, young men who binge in high school will face an earnings penalty of 1.5-1.84 percentage points. Women also face a penalty, but this seems mostly due to the fact that women who graduate late work in industries and occupations that pay less. Copyright © 2006 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/hec.1178
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    Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

    Volume (Year): 16 (2007)
    Issue (Month): 4 ()
    Pages: 407-419

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    Handle: RePEc:wly:hlthec:v:16:y:2007:i:4:p:407-419
    Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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    1. Jenny Williams & Lisa Powell & Henry Wechsler, 2003. "Does alcohol consumption reduce human capital accumulation? Evidence from the College Alcohol Study," Applied Economics, Taylor & Francis Journals, vol. 35(10), pages 1227-1239.
    2. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
    3. Pinka Chatterji & Jeff DeSimone, 2005. "Adolescent Drinking and High School Dropout," NBER Working Papers 11337, National Bureau of Economic Research, Inc.
    4. Kenneth Bollen & David Guilkey & Thomas Mroz, 1995. "Binary outcomes and endogenous explanatory variables: Tests and solutions with an application to the demand for contraceptive use in tunisia," Demography, Springer, vol. 32(1), pages 111-131, February.
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