Research Article - The economic cost of teen drinking: late graduation and lowered earnings

Early View (Articles online in advance of print)
Published Online: 9 Oct 2006

Research Article
The economic cost of teen drinking: late graduation and lowered earnings Francesco Renna *
Department of Economics, The University of Akron, USA

email: Francesco Renna (Frenna@uakron.edu)
*Correspondence to Francesco Renna, Department of Economics, The University of Akron, USA

Abstract
This paper analyzes the effect that binge drinking has on the probability of graduating on time from high school and on future earnings. The analysis is conducted on students in their senior year of high school using data from the National Longitudinal Survey of Youth 1979.

Importantly, the usual instruments used to correct for the endogeneity of the drinking variable are found to be robust only for women.

This paper finds that heavy drinking decreases the probability of graduating on time. Binge drinking does not have a direct impact on adults' labor earnings, but graduating late results in lower labor income. Because of a late graduation, young men who binge in high school will face an earnings penalty of 1.5-1.84 percentage points.

Women also face a penalty, but this seems mostly due to the fact that women who graduate late work in industries and occupations that pay less.