HEALTH, BINGE DRINKING, AND LABOR MARKET SUCCESS: A LONGITUDINAL STUDY ON YOUNG PEOPLE

Health, like schooling, is a form of human capital and can be expected to be positively related to labor productivity and labor supply. The production of good health and labor productivity, however, sometimes competes with an individual's lifestyle, e.g., binge drinking. In this study, an individual's health has three dimensions: current health status, binge drinking which is an unhealthy lifestyle, and stature or mature height which is a young adult's health endowment. This study presents and fits a dynamic model of an individual's demand for health, demand for binge drinking, labor supply, and wage or demand for labor equations to NLSY 1979 cohort panel data of young people. We find that binge drinking has a negative but insignificant effect on the demand for health, an individual's good health and larger stature increases his/her wage and binge drinking reduces it. An individual's good health and binge drinking increase his/her labor supply. An individual's decision to binge drinking is shown to be rational addiction which is forward looking (rather than myopic which ignore future impacts) and to be highly responsive to the price of alcohol in the long run and to the legal minimum drinking age. We also show that labor productivity of 1979 NLSY cohort is most likely 6 percent lower than earlier cohorts due to their higher frequency of binge drinking, shorter stature, and lower educational achievement.