The Impact of Alcohol and Drug Use on Employment: A Labor Market Study Using the National Longitudinal Survey of Youth


The purpose of this study was, first, to estimate of the impact of alcohol and drug use on the employment status of men and women, and second, to examine whether a history of past use, as opposed to current use, adversely affects the propensity to be employed. Using data from the National Longitudinal Survey of Youth we conducted a cross-sectional and a longitudinal analysis with logistic regression estimation to model the probability that a person was employed in 1992. In addition to usual regressors, interactions between substance use measures, between substance use measures and human capital variables, and between substance use measures and race dummies were included in the equation. The longitudinal analysis utilized a conditional likelihood method based on employment data in 1992 and 1988 and included the difference between 1992 regressors and their 1988 counterparts. A comparison was made between the prediction accuracy of the logit choice model, linear discriminant analysis, k-nearest neighbor analysis, and three modern classification methods that are used extensively in the area of machine learning. Results showed that the logit model performs relatively well in classifying individuals into employed and unemployed categories based on individual attributes. Results of the cross-sectional and longitudinal analysis were mixed, but not inconsistent with our prior expectations that use of alcohol or drug has a negative impact on a person's propensity to be employed. Cross-sectional results show a clear negative impact of past substance use on a person's employment probability among all demographic groups examined (by gender: all persons, blacks, Hispanics, families with income below the poverty line, and high users of alcohol or drugs). However, when current and past use are considered together, only women seem to experience negative impacts. The results of the longitudinal analysis are less clear, although they do indicate that negative impacts are associated with the interaction between substance use measures and human capital variables. Limitations of the study are pointed out and suggestions are made for future research.


Mathematics and Statistics

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Article - Journal

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© 1996 Research Papers in Economics, All rights reserved.

Publication Date

01 Jan 1996

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