Essays in Labor Economics: Alcohol consumption and socioeconomic outcomes

TitleEssays in Labor Economics: Alcohol consumption and socioeconomic outcomes
Publication TypeThesis
Year of Publication2007
AuthorsSarpong, E
Academic DepartmentEconomics
DegreeDoctor of Philosophy
UniversityGeorgia State University
CityAtlanta, GA
KeywordsDemographics, Employment and Labor Force, Health Conditions and Status, Net Worth and Assets

Recent studies indicate that alcohol consumption may affect socioeconomic outcomes through its effects on health capital and social capital. If, in fact, differences in socioeconomic outcomes are causally linked to differences in alcohol consumption, then lack of adequate insight into such connectivity may adversely affect the labor market and retirement outcomes of some groups of individuals in society. The rationale for examining the relationship between alcohol consumption and socioeconomic outcomes stems from growing concerns about deterioration in retirement outcomes resulting from declining health capital and recent shifts to incorporate social capital as a key performance or productivity indicator by employers. In two essays, this research examines the impact of alcohol consumption on wealth at retirement using data from the RAND Health and Retirement Study (HRS) from 1992 through 2002; and the effects of alcohol consumption on employment duration and earnings using the Geocode version of the National Longitudinal Survey of Youth (NLSY1979) micro dataset from 1984 through 1996. The theoretical foundation of the association between alcohol use and economic outcomes relies on Grossman's (1972) health capital model. Empirically, the research relies on panel data methods and duration analysis to determine whether differences in socioeconomic outcomes can be explained by differences in alcohol consumption. Using both duration analysis and panel data methods, the results indicate that drinking is positively related to improved socioeconomic outcomes as compared to total abstention, when endogeneity has not been taken into account. In contrast, under the duration analysis, estimation via instrumental variables approach indicates that alcohol consumption shortens employment duration. Panel data estimation indicates that the relationship between alcohol consumption and socioeconomic outcomes is rather an inverted U-shaped for some specifications, when endogeneity has been taken into account. Additionally, the effects of drinking on retirement wealth and earnings tend to diminish with the instrumental variables approach. The findings were unchanged even with abstainers partitioned into lifetime abstainers and infrequent or light drinkers (less than one drinking day per week). The results also confirm the positive association between human capital measures such as the level of education and economic outcomes and also the negative relationship between alcohol consumption and taxes on alcoholic beverages. This dissertation contributes to the literature on alcohol-socioeconomic outcomes nexus and has implications for policies related to health, social capital and alcohol since a more inclusive alcohol and/or health policy could improve civic responsibility and narrow the health capital and social capital gap, both of which are critical to individual level socioeconomic success.

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Labor Force Participation

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Citation Key6079