Adolescent Drinking and High School Dropout

This paper estimates the effect of binge and frequent drinking by adolescents on subsequent high school dropout using data from the National Longitudinal Survey of Youth 1979 Young Adults. We estimate an instrumental variables model with an indicator of any past month alcohol use, which is by definition correlated with heavy drinking but should have minimal additional impact on educational outcomes, as the identifying instrument, and also control for a rich set of potentially confounding variables, including maternal characteristics and dropout risk factors measured before and during adolescence. In comparison, OLS provides conservative estimates of the causal impact of heavy drinking on dropping out, implying that binge or frequent drinking among 15—16 year old students lowers the probability of having graduated or being enrolled in high school four years later by at least 11 percent. Overidentification tests using two measures of maternal youthful alcohol use as additional instruments support our identification strategy.