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Does Unemployment Lead to Greater Alcohol Consumption?


  • Financial assistance for this study was provided by the National Institute on Alcohol Abuse and Alcoholism (R01 AA015695). Thanks are due to Carmen Martinez, Christina Gonzalez, Allison Johnson, and William Russell for editorial assistance. We gratefully acknowledge Hai Fang for help with data analysis. We also thank Thomas McGuire and participants at the 2010 American Society of Health Economists conference for helpful suggestions on an earlier version of the article. The data used to generate the results presented in the article come from the National Epidemiologic Survey on Alcohol and Related Conditions (NESARC), which are available from the National Institute on Alcohol Abuse and Alcoholism of the National Institutes of Health.


Using panel data from Waves 1 and 2 of the NESARC, we estimate gender-specific effects of changes in employment status on overall alcohol consumption, binge-drinking episodes, and a diagnosis of alcohol abuse and/or dependence. We employ various fixed-effects models to address potential bias from unobserved and time-invariant individual heterogeneity. All results show a positive and significant effect of unemployment on drinking behaviors, and the findings are robust to numerous sensitivity tests. Perhaps, macroeconomic policy decisions intended to stimulate the economy during economic downturns should also consider the avoided personal costs and externalities associated with alcohol misuse.