The causal effect of alcohol consumption on employment status

Alcohol consumption may affect labor market outcomes directly through a reduction in productivity and indirectly through human capital accumulation. However, empirical results from previous studies in the economics literature are mixed and inconclusive. While some researchers found negative effects of alcohol use on labor market outcomes, quite a few studies found either positive or insignificant effects. The purpose of this dissertation is to estimate causal effects of alcohol consumption on employment status. It uses three data sets previously unexploited for this purpose and attempts to eliminate any potential estimation problems from previous studies. The results show that previous problematic heavy drinking, i.e. clinically-defined alcohol abuse and/or dependence, has no significant direct effects, but has significant indirect effects on current employment propensity for both genders through human capital components, specifically educational attainment and health status. While general alcohol consumption has only an indirect effect on employment status for females, it has both direct and indirect effects on employment status for males, though the direct effect is very small