Working Paper: NBER ID: w30813
Authors: Dhaval M. Dave; Yang Liang; Caterina Muratori; Joseph J. Sabia
Abstract: Despite nearly 70 percent of the American public supporting legalization of recreational marijuana, opponents argue that increased marijuana use may diminish motivation, impede cognitive function, and harm health, each of which could adversely affect adults’ economic wellbeing. This study is the first to explore the impacts of recreational marijuana laws (RMLs) on employment and wages. Difference-in-differences estimates show little evidence that RMLs adversely affect labor market outcomes among most working-age individuals. Rather, our estimates show that RML adoption is associated with an increase in agricultural employment, consistent with the opening of a new licit market. A causal interpretation of our findings is supported by (1) event-study analyses using dynamic difference-in-differences estimates designed to expunge bias due to heterogeneous and dynamic treatment effects, and (2) alternative policy estimates generated using a synthetic control design.
Keywords: Recreational Marijuana; Employment; Labor Market Outcomes
JEL Codes: H71; I12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| legalization of recreational marijuana (RML) (K16) | adult marijuana use (I12) |
| legalization of recreational marijuana (RML) (K16) | probability of employment (J68) |
| legalization of recreational marijuana (RML) (K16) | wages (J31) |
| legalization of recreational marijuana (RML) (K16) | agricultural employment (J43) |
| legalization of recreational marijuana (RML) (K16) | employment for Hispanic individuals (J82) |
| legalization of recreational marijuana (RML) (K16) | employment for individuals over age 30 (J68) |