The Effect of Alcohol Prohibition on Illicit Drug Related Crimes: An Unintended Consequence of Regulation

This paper evaluates the effect of alcohol access on drug-related crime using detailed information on county and state level changes in access laws in Texas between 1978 and 1996. After controlling for both county and year fixed effects, we find evidence that allowing local alcohol access decreases crimes associated with illicit drugs. We also find that prohibiting the sale of beer to persons under 21 increases the fraction of drug related arrests involving juveniles more in wet counties than in dry counties. Because access decreases the implicit price for alcohol and increasing the minimum drinking age is likely to increase the implicit price of liquor more for juveniles in wet counties relative to those in dry counties, our results suggest that alcohol and illicit-drugs are substitutes. JEL Classification: I18, H73, R50 Acknowledgments: For providing the data, we are indebted to Randy Yarbrough at the Texas Alcohol Beverage Commission, Elaine McDade and Clara Ramirez at the Texas Office of the Comptroller, Mike Viesca at the Texas Vehicle Title and Registration Division, Kim Hajek and Rick Cortez at the Texas Department of Transportation, Arlene Mendez and Sissy Jones at the Texas Department of Public Safety, and Monty Ickers at the Texas Municipal League. Reagan Baughman was extremely helpful in helping us pull all of these data together. All remaining errors are our own.