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Journal of Population Economics

, Volume 23, Issue 1, pp 303–322 | Cite as

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

  • Shao-Hsun KengEmail author
  • Wallace E. Huffman
Original Paper

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.

Keywords

Binge drinking Earnings Rational addiction Health Labor productivity Panel data 

JEL Classification

J10 J22 J24 

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Copyright information

© Springer-Verlag 2006

Authors and Affiliations

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

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