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Alcohol Taxes and Labor Market Outcomes

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  • Dhaval Dave
  • Robert Kaestner

Abstract

In this paper, we present estimates of the effect of alcohol taxes on employment, hours of work per week, and wages. These are reduced form estimates derived from a structural model linking alcohol use to labor market outcomes. The reduced form estimates are meaningful in two ways: first, they provide estimates of the effect of an important public policy tool, alcohol taxes, on labor market outcomes, and second, they can be used to evaluate hypotheses about the structural effects of alcohol use on labor market outcomes. The results of the analysis suggest that alcohol taxes are unrelated to employment, hours of work, and wages. Estimates of the effect of alcohol taxes on labor market outcomes were large and imprecise, and characterized by significant variation in sign and magnitude across samples and types of alcohol taxes. This suggests that there is a weak and indeterminate relationship between alcohol taxes and labor market outcomes. This finding implies that alcohol use does not adversely affect labor market outcomes and is inconsistent with findings from previous studies.

Suggested Citation

  • Dhaval Dave & Robert Kaestner, 2001. "Alcohol Taxes and Labor Market Outcomes," NBER Working Papers 8562, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8562
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    Cited by:

    1. Carrell, Scott E. & Hoekstra, Mark & West, James E., 2011. "Does drinking impair college performance? Evidence from a regression discontinuity approach," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 54-62, February.
    2. Lindo, Jason M. & Swensen, Isaac D. & Waddell, Glen R., 2013. "Alcohol and student performance: Estimating the effect of legal access," Journal of Health Economics, Elsevier, vol. 32(1), pages 22-32.
    3. Yörük Ceren Ertan, 2015. "The Effect of Alcohol Consumption on Labor Market Outcomes of Young Adults: Evidence from Minimum Legal Drinking Age Laws," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(3), pages 1297-1324, July.
    4. Pinka Chatterji & Jeffrey DeSimone, 2006. "High School Alcohol Use and Young Adult Labor Market Outcomes," NBER Working Papers 12529, National Bureau of Economic Research, Inc.
    5. Ruhm, Christopher J. & Jones, Alison Snow & McGeary, Kerry Anne & Kerr, William C. & Terza, Joseph V. & Greenfield, Thomas K. & Pandian, Ravi S., 2012. "What U.S. data should be used to measure the price elasticity of demand for alcohol?," Journal of Health Economics, Elsevier, vol. 31(6), pages 851-862.
    6. Tekin, Erdal, 2002. "Employment, Wages, and Alcohol Consumption in Russia: Evidence from Panel Data," IZA Discussion Papers 432, Institute for the Study of Labor (IZA).
    7. Ziggy MacDonald & Michael A. Shields, 2004. "Does problem drinking affect employment? Evidence from England," Health Economics, John Wiley & Sons, Ltd., vol. 13(2), pages 139-155.
    8. Inas Kelly & Dhaval Dave & Jody Sindelar & William Gallo, 2014. "The impact of early occupational choice on health behaviors," Review of Economics of the Household, Springer, vol. 12(4), pages 737-770, December.
    9. van Ours, J.C., 2002. "A Pint a Day Raises a Man's Pay; But Smoking Blows that Gain Away," Discussion Paper 2002-20, Tilburg University, Center for Economic Research.
    10. West, Sara E. & Parry, Ian W.H., 2009. "Alcohol-Leisure Complementarity: Empirical Estimates and Implications for Tax Policy," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(4), pages 611-633, December.
    11. van Ours, Jan C., 2004. "A pint a day raises a man's pay; but smoking blows that gain away," Journal of Health Economics, Elsevier, vol. 23(5), pages 863-886, September.
    12. repec:pit:wpaper:356 is not listed on IDEAS
    13. Evan Herrnstadt & Ian Parry & Juha Siikamäki, 2015. "Do alcohol taxes in Europe and the US rightly correct for externalities?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(1), pages 73-101, February.
    14. Parry, Ian W.H. & Laxminarayan, Ramanan & West, Sarah E., 2006. "Fiscal and Externality Rationales for Alcohol Taxes," Discussion Papers dp-06-51, Resources For the Future.
    15. Philip J. Cook & Bethany Peters, 2005. "The Myth of the Drinker's Bonus," NBER Working Papers 11902, National Bureau of Economic Research, Inc.
    16. Bethany Peters, 2004. "Is there a wage bonus from drinking? Unobserved heterogeneity examined," Applied Economics, Taylor & Francis Journals, vol. 36(20), pages 2299-2315.
    17. Tinna Laufey Ásgeirsdóttir & Harpa H. Berndsen & Bryndís Þ. Guðmundsdóttir & Bryndís A. Gunnarsdóttir & Hugrún J. Halldórsdóttir, 2016. "The effect of obesity, alcohol misuse and smoking on employment and hours worked: evidence from the Icelandic economic collapse," Review of Economics of the Household, Springer, vol. 14(2), pages 313-335, June.
    18. Tinna Asgeirsdottir & Kerry McGeary, 2009. "Alcohol and labor supply: the case of Iceland," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 10(4), pages 455-465, October.
    19. Alison Snow Jones & David W. Richmond, 2006. "Causal effects of alcoholism on earnings: estimates from the NLSY," Health Economics, John Wiley & Sons, Ltd., vol. 15(8), pages 849-871.
    20. Bethany Peters, 2009. "The drinkers' bonus in the military: officers versus enlisted personnel," Applied Economics, Taylor & Francis Journals, vol. 41(17), pages 2211-2220.
    21. Colin P. Green & Maria Navarro Paniagua, 2016. "Play Hard, Shirk Hard? The Effect of Bar Hours Regulation on Worker Absence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(2), pages 248-264, April.

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    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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