Effect of alcohol consumption on youth employment in Mexico

In Mexico one out of four youths age 12 to 17 years old consume alcohol and are working. It is found that alcohol consumption is associated to a higher probability of working at an early age, and labour participation may increase alcohol consumption. We control for biases due to reverse causality and selectivity by using peer influence and emotions as instruments. We find a direct and robust relationship between alcohol consumption and youth employment in the range of 2.07 and 2.34 percentage points.