THE ROLE OF UNEMPLOYMENT INSURANCE ON ALCOHOL USE AND ABUSE FOLLOWING JOB LOSS ROBERT LANTIS AND BRITTANY TEAHAN

THE ROLE OF UNEMPLOYMENT INSURANCE ON ALCOHOL USE AND ABUSE FOLLOWING JOB LOSS ROBERT LANTIS AND BRITTANY TEAHAN

MOTIVATION 2013 National Survey on Drug Use and Health finds that 17% of unemployed have substance abuse problems compared to 9% of the employed

UNEMPLOYMENT AND ALCOHOL CONSUMPTION Davalos et al (2012) Decrease in income and workplace related social activities reduce alcohol consumption Increase in leisure time and reduction in mental health increase alcohol use Reverse causality Alcohol abuse may lead to unemployment, but unemployment may also lead to alcohol abuse

RELATED LITERATURE Alcohol use is procyclical Ruhm (1995) Freeman (1999) Ruhm and Black (2005) Binge Drinking increases during economic downturns Dee (2001)

RELATED LITERATURE Alcohol related responses to changes in income and employment status are heterogeneous French and Zarkin (1995) Alcohol consumption for moderate drinkers is most sensitive to changes in income Manning et al (1995) Heavy drinkers alcohol consumption is virtually unaffected by changes in income Deb et al (2011) Individuals with a history of alcohol abuse were most likely to increase alcohol consumption following job loss

RELATED LITERATURE Economic downturns are associated with a decline in mental health Ruhm (2000 and 2003) Non-psychotic mental disorders and suicide rates increase with the unemployment rate Charles and DeCicca (2008) Use a psychological distress scale to measure mental health and find mental health decreases as local labor market conditions deteriorate Tefft (2011) Google Insight for Search Data Searches for depression are Positivity related to the unemployment rate Negatively related to the number of initial UI claims

RELATED LITERATURE Alcohol as a means for self-medication Harris and Edlund (2005) Unmet need for mental health care and substance abuse are positively related Hill and Angel (2005) Individuals consume alcohol to reduce feelings of depression and anxiety

CONTRIBUTIONS TO THE LITERATURE Use individual level data on alcohol use and abuse and employment status to investigate the role of unemployment benefits on drinking behavior following job loss Explore avenues through which unemployment benefits affect alcohol use and abuse Benefits provide income and alcohol is a normal good Benefits reduce stress associated with job loss potentially reducing the need to use alcohol to self-medicate

DATA National Longitudinal Survey of Youth (NLSY) 1979 and 1997 cohorts supplemented with Geocode data Job gap dates allow for identification of individual employment status Several measures of alcohol use and abuse US Department of Labor Employment and Training Administration (ETA) State average weekly replacement rate (1989-2012) Replacement Ratio= Weighted Average of Weekly Benefit Amount / (Normal Hourly Wage x 40 hours)

VARIATION IN REPLACEMENT RATES ACROSS STATES Mean: 0.47 Min: 0.30 Max: 0.60

ALCOHOL VARIABLES Alcohol use and abuse questions were asked at uneven intervals Have you had any alcoholic beverages, including beer, wine, or liquor, during the last 30 days? Years: 1982-1985, 1988, 1989, 1994, 2002, 2006, 2008, 2010 How often have you had 6 (5 in 1997 sample) or more drinks on one occasion during the last 30 days? Years: 1982-1985, 1988, 1989, 1994, 2002, 2006, 2008, 2010

ALCOHOL VARIABLES During the last 30 days, on how many days did you drink any alcoholic beverages? Years: 1983-1985, 1988, 1989, 1992, 1994, 2002, 2006, 2008, 2010 On the days that you drink, about how many drinks do you have on the average day? Years: 1988, 1989, 1992, 1994, 2002, 2006, 2008, 2010

BINGE DRINKING CATEGORIES Never 1 to 4 times in the past month 5 to 9 times in the past month 10 or more times in the past month

ALCOHOL ABUSE GUIDELINES The U.S. National Library of Medicine defines being at risk for alcoholism or alcohol abuse as the following Consuming more than 5 drinks on any single day at least once a week Men (women) who consume more than 15 (12) drinks per week 22% of individuals using alcohol are classified as alcohol abusers in our sample

SUMMARY STATISTICS

CHANGE IN INTERVIEW WEEK

EMPIRICAL STRATEGY

EMPIRICAL STRATEGY Identification comes from variation in unemployment benefit laws within a state over time and across states The effect of replacement rates is estimated on only individuals who were employed at the interview in time t-x but employed at interview in time t As a counterfactual we use only individuals employed at both time t and time t-x

TIME GAPS BETWEEN INTERVIEWS

ESTIMATING THE PROBABILITY OF STARTING AND STOPPING ABUSE Use the NIH s guidelines for classification of at risk for alcoholism or alcohol abuse to define as abusers Estimate the effect of benefits on the probability of becoming an alcohol abuser (starting abuse) upon job loss, as well as becoming a non-abuser (stopping abuse)

MARGINAL EFFECTS OF BENEFITS ON DIFFERENT TYPES OF ALCOHOL USERS

CONCLUSION More generous unemployment insurance benefits increase an individual s alcohol use and abuse upon job loss The magnitude of the effect varies with past alcohol consumption Moderate drinkers are the most sensitive to changes in benefit levels