Does a pint a day affect your child’s pay? : Prenatal alcohol exposure and child outcomes, Evidence from a policy experiment

Abstract: In this thesis I evaluate the impact of an experiment with free sales of strong beer in two Swedish counties that took place in the 1960s. I do this by studying adult earnings of persons in utero during the experiment. My data includes date and place of birth and allows me to evaluate the impact of the experiment using a difference-in differences methodology, comparing earnings across cohorts and counties. Since the availability of alcohol increased most heavily for persons under the age of 21, and male fetuses are less physiologically robust than female fetuses, I choose to study persons born by mothers younger than 21 separately and also estimate the impact of the experiment separately for men and women. I find that persons born by mothers under the age of 21 during the experiment have lower average earnings than persons born before the experiment, and that the impact is larger on men. My results indicate that the experiment has led to adverse effects on adult earnings, probably caused by the prenatal alcohol exposure’s negative impact on fetal development. This means that alcohol consumption have long-term consequences that represent large costs to society. Since these costs are generally disregarded when evaluating the cost of alcohol consumption, society’s cost of alcohol is probably higher than usually estimated.