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Binge drinking and labor market success: a longitudinal study on young people

Shao-Hsun Keng and Wallace E. Huffman
Journal of Population Economics
Vol. 23, No. 1 (January 2010), pp. 303-322
Published by: Springer
Stable URL: http://www.jstor.org/stable/20685316
Page Count: 20
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Binge drinking and labor market success: a longitudinal study on young people
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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), 1979-1994. We show that binge drinking behavior is quite alcohol-price 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 short-run and long-run impacts of increasing the alcohol price. They showed that the tendency for an individual to binge drink heavily is reduced significantly, and the reduction is greater in the long-run than short-run 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 cross-section evidence that showed increased alcohol consumption raised an individual's earnings or wages.

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