ALCOHOL DEMAND & LABOR MARKET OUTCOMES II--LABOR MARKET

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APPLICANT'S ABSTRACT: The main objective of this component of the proposed IRPG project is to specify and test statistically a set of hypotheses regarding the relationships between the use and misuse of alcoholic beverages and labor market outcomes, including labor supply, employment, earnings, and wages. The study will focus on the direct questions of how alcohol consumption and problem drinking affect labor market outcomes and the indirect questions of, for example, how price and tax policies affect labor market outcomes via their impacts on consumption. Among the innovations in the proposed research is its synthesis (via the IRPG) of methodologies and results from the heretofore largely separate research areas on the demand for alcoholic beverages and the effects of alcohol consumption and problem drinking on labor market success. The study will utilize data on adults from the first wave of the National Longitudinal Alcohol Epidemiologic Survey (NLAES-I), conducted in 1991-92. The basic analytical context of the proposed study is in the labor economics tradition of assessing the structural determinants of labor supply and productivity. The project's synthetic component will allow the enhanced estimates of alcohol demand relationships to permit a more consistent empirical perspective on alcohol's labor market effects than has been previously attempted. The study will employ state-of-the-art statistical methodologies to estimate the key parameters of such relationships, to draw inferences thereabout, and to test the "goodness of fit" of the postulated empirical relationships. Since the social costs associated with the misuse of alcoholic beverages are now generally regarded to be huge, information about relationships like those to be examined in the proposed research is of central importance in efforts to target prevention efforts in a reasonable manner. From a cost-effectiveness perspective it is clearly essential to have a coherent sense of what prevention efforts accomplish if scarce resources are to be sensibly allocated. The results of the proposed study will provide a reliable basis for addressing some of these issues.