Does alcohol consumption lead to greater unemployment? The case of US

The main objective of this thesis is to find the relationship between alcohol consumption and unemployment and explicitly how changes in alcohol consumption affect unemployment. In the theoretical part we will discuss basic factors related to the unemployment rate. Additionally, we will analyze the relationship between alcohol consumption and unemployment backed by relevant economic analysis including behavioral economics. We will study 3 states from the US (California, Georgia, Michigan). Many economists have proved that increased alcohol consumption increases unemployment, among others Johansson et al. (2000), MacDonald and Shields (2004), Terza (2002) or Popovici and French (2013). However, this research is based on micro data collected from surveys, while we will use the most available macro data in order to conduct analysis. We gathered data for our three between years 1987-2015. As the dependent variable we chose unemployment and for independent variables percentage change in GDP, inflation, average real income, state and federal expenditures on unemployment benefits, apparent per capita alcohol consumption, NASDAQ-100 index, proportion of people from ethnic groups, share of women and dummy variable crisis, which will be 1 in years of financial or economic crisis and 0 otherwise. We confirmed our hypothesis that increased alcohol consumption leads to a higher unemployment rate, mostly due to loss of productivity. Reversed causality that increased unemployment leads to higher alcohol consumption was denied.