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

  • Keng, Shao-Hsun
  • Huffman, Wallace

This paper presents a two equation model of joint outcomes on an individualï¾’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 individualï¾’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 individualï¾’s annual earnings were increased. However, in the structural model, an individualï¾’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 individualï¾’s earnings or wages.

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File URL: http://www.econ.iastate.edu/sites/default/files/publications/papers/paper_12299_05014.pdf
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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
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.eduEmail:


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