Working Paper: NBER ID: w22980
Authors: Howard Bodenhorn
Abstract: In 1893 South Carolina prohibited the private manufacture, transportation, and sale of alcohol and established a state monopoly in wholesale and retail alcohol distribution. The combination of a market decline in the availability of alcohol, reduced variety, and monopoly pricing at state-operated outlets encouraged black markets in alcohol. Because black market participants tend to resort to extra-legal mechanisms for dispute resolution, including violence, one result of South Carolina’s alcohol restriction was an increase in homicide. A continuous-treatment difference-in-difference approach reveals that homicide rates increased by about 30 to 60 percent in counties that more vigorously enforced the law.
Keywords: alcohol regulation; homicide rates; prohibition; black markets; South Carolina
JEL Codes: K14; K42; N41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Liquor law enforcement (K40) | Homicide prosecution rates (K42) |
| Establishment of state monopoly on alcohol sales in 1893 (L66) | Homicide rates (J11) |
| Liquor law enforcement (K40) | Black markets for alcohol (J46) |
| Black markets for alcohol (J46) | Extralegal dispute resolution methods (including violence) (K41) |
| Liquor law enforcement (K40) | Transformation of existing markets for alcohol (L66) |
| Transformation of existing markets for alcohol (L66) | Increased violence (D74) |