Munich Personal RePEc Archive

Parents in Temperance

Zhang, Xiaohan (2020): Parents in Temperance.

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Abstract

This paper studies how alcohol prohibition affected labor force and parental characteristics by exploiting county-level variations in prohibition status. These local alcohol prohibition laws lead to a “sobering effect” that improved labor market and educational outcomes of working-age adults. However, they also introduced significant levels of negative selection into parenthood. Evidence on job displacements in a variety of alcohol-related industries suggests that such negative selection could be explained by the life-cycle fertility model, where displacement shocks affected those on the lower end of the income distribution, reduced their opportunity cost of fertility, and nudged them into parenthood. The sobering effect mitigated the negative selection effect, and the net effect suggests a minor underestimation of the benefits of limiting parental drinking in the prohibition literature.

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