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Journal of Population Economics

, Volume 20, Issue 1, pp 35–54 | Cite as

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

  • Shao-Hsun Keng
  • Wallace E. HuffmanEmail author
Original Paper
  • 275 Downloads

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, 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 that the tendency for an individual to binge-drink heavily is reduced significantly, and the reduction is greater in the long- 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-sectional evidence that showed increased alcohol consumption raised an individual's earnings or wages.

Keywords

Binge drinking Earnings Rational addiction Health Labor productivity Panel data 

JEL Classification

J10 J22 J24 

Notes

Acknowledgements

The authors acknowledge helpful comments and suggestions from Wayne Fuller, Hal Stern, Peter Orazam, Justin Tobias an anonymous referee, and Daniel Hamermesh, coeditor. They also acknowledge cooperation from the US Department of Labor for access to the NLSY79 panel with geocodes, agreement no. 96–26, and the Iowa Agriculture and Home Economics Experiment Station for financial assistance.

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Copyright information

© Springer-Verlag 2005

Authors and Affiliations

  1. 1.Department of Applied EconomicsNational University of KaohsiungKaohsiungTaiwan
  2. 2.Department of EconomicsIowa State UniversityAmesUSA

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