Binge Drinking and Labor Market Success: ALongitudinal Study on Young People

This paper presents a twoequationmodel of joint outcomes on an individual’sdecision to binge drink and on his/her annual labor market earnings. The primary data source isthe 1979 cohort of the National Longitudinal Survey of Youth (NLSY79), 19791994.We showthat binge drinking behavior is quite alcoholpriceresponsive and is a rational addiction. A newresult is that an individual’s decision to binge drink has a statistically significant negative effect onhis/her earnings. Furthermore, we conducted simulations of the shortrunand longrunimpacts ofincreasing the alcohol price. They showed that that the tendency for an individual to binge drinkheavily is reduced significantly, and the reduction is greater in the longthanshortrunsimulation.Also, an individual’s annual earnings were increased. However, in the structural model, anindividual’s earnings have no significant effect on his/her tendency to engage in binge drinking.Our results contradict earlier findings from crosssectionevidence that showed increased alcoholconsumption raised an individual’s earnings or wages.[...]