The Effects of Recreational Marijuana Legalization on Employment and Earnings

Dhaval Dave, Yang Liang, Caterina Muratori () and Joseph J. Sabia

No 30813, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: H71 I12 (search for similar items in EconPapers)
Date: 2022-12
New Economics Papers: this item is included in nep-hea and nep-lab
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