Does Unemployment Lead to Greater Alcohol Consumption?

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.