In this study I test whether leaving school in an economic downturn has a lasting impact on alcohol use.  Two empirical patterns motivate this research.  Workers who leave school in an economic downturn persistently earn lower wages and labor market outcomes are associated with alcohol use.  Recent work suggests that leaving school in an economic downturn has a lasting impact on health outcomes (mental and physical functioning, obesity).  We know little about health behaviors such as alcohol use, however.  Understanding risk factors for alcohol use, particularly excessive use, is important for improving social welfare.  Because of market imperfections excessive drinkers do not fully internalize the cost of their actions and instead impose costs on others through motor vehicle accidents, health care utilization, violence, crime, reduced labor market productivity, etc.  The costs of alcohol for the U.S. are estimated to be as high as $255 billion per year (Bouchery et al, 2011).  

I examine three measures of past 30 day alcohol use in middle age: number of alcoholic drinks, heavy drinking (≥ 60 drinks), and weekly binge drinking.  Data are drawn from the National Longitudinal Survey of Youth 1979 Cohort.  I proxy economic conditions at school-leaving with the state unemployment rate, and exploit variation generated by volatility in the U.S. business cycle between 1976 and 1992 to identify alcohol use effects.  Because the severe recession of the early 1980s lies within this time period, I compare cohorts that left before, during, and after this recession.  To address the potential endogeneity of the time and location of school-leaving, I instrument the school-leaving state unemployment rate. 

My results suggest that leaving school in an economic downturn persistently affects alcohol use, and in particular measures of excessive use, and the relationship varies by sex.  Men who leave school in an economic downturn consume more drinks and are more likely to report heavy and weekly binge drinking than otherwise similar men.  Alternatively, women’s alcohol use is not substantially impacted by leaving school in an economic downturn.  Among men, I find that a 1 percentage point increase in the school-leaving state unemployment rate leads to a 7.6 to 12.3%; 9.7 to 17.3%; and 9.6 to 12.7% increase in the past month number of drinks consumed, probability of heavy drinking, and probability of weekly binge drinking.  Results are robust to addressing potential endogeneity in the time and location of school-leaving.

These findings are timely as the U.S. is slowly recovering from the 2007 to 2009 recession, in March 2013 7.6% of adults were unemployed and rate among young adults was even higher: for example, 13.3% among those ages 20 to 24 years.  Policy makers are concerned about the well-being of the cohort of youth that left school during this recession and slow recovery period.  Members of this cohort are experiencing difficulty obtaining satisfying and sustainable employment.  My findings suggest the full consequences of the 2007 to 2009 recession may extend beyond the labor market and into heath domains, and the effects may be persistent.