Date of Award

1-5-2007

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Dr. Shiferaw Gurmu - Chair

Second Advisor

Dr. Paula E. Stephan

Third Advisor

Dr. Erdal Tekin

Fourth Advisor

Dr. Gregory B. Lewis

Abstract

Recent studies indicate that alcohol consumption may affect economic outcomes through its effects on health capital and social capital. If, in fact, differences in economic 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. In two essays, this dissertation 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. This dissertation relies on Grossman's 1972 health capital model. Empirically, the research relies on panel data methods and duration analysis to determine whether differences in economic outcomes can be explained by differences in alcohol consumption. 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 under both duration analysis and panel data methods. When endogeneity is taken into account, alcohol consumption tends to shorten the duration of employment via survival analysis. Also, estimation via instrumental variables approach indicates that the relationship between alcohol consumption and socioeconomic outcomes (retirement wealth and earnings) is rather an inverted U-shaped for some panel data specifications. Moreover, the effects of alcohol consumption on retirement wealth and earnings tend to diminish with instrumental variables approach. These findings did not change even with abstainers partitioned into lifetime abstainers and infrequent or light drinkers (less than one drinking day per week).

Included in

Economics Commons

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