A Test of Prohibition's Effect on Alcohol Production Using Crop Yields

Abstract

The effects of alcohol Prohibition in the United States have been the subject of debate and research since the laws were enacted. Due to a lack of data, one question that remains unanswered is the effect Prohibition had on the actual production of alcohol. This paper attempts to answer this question by estimating Prohibition's impact on the yields of various grains which constitute one of the principal inputs in alcohol production. Understanding the impact of Prohibition on crop output plays an important role in parsing out its effect on alcohol production. Using a variety of data sources and exploiting the variation in timing of state prohibition law adoption, we estimate the effect of Prohibition on several measures of crop production. Our preferred identification strategy compares contiguous counties in states with differing prohibition laws. Our findings suggest that state prohibition laws decreased the production of barley and increased the production of corn.

Keywords: Prohibition, contiguous counties, alcohol production

JEL Classification: N41, N51, K23, K42