Date of this Version
Varon, Sara. The Green Wave: Effects of Legal Marijuana on The Labor Market. Undergraduate Honors Thesis. University of Nebraska-Lincoln, March 2022.
In this paper I examine the relationship between the introduction of recreational marijuana laws and the labor market. First, using Google Trends data I find evidence that states that undergo the treatment of recreational marijuana legalization will likely experience a large and significant increase in search volume terms related to marijuana demand following the implementation of marijuana regulations. Using this same data set, I find support for the theory that as marijuana legalization becomes more entrenched within each individual state, public interest for marijuana also increases which allows for the use of Google Trends data as a proxy for legalization in each individual state. Then, using QWEC data, I find that recreational marijuana laws are associated with a significant positive effect in employment and total wages in marijuana-related industries compared to non-related marijuana industries with possible evidence of insignificant both positive and negative spillover effects of marijuana legalization to other non-legal states and non-marijuana-related industries. Assuming there were no unaccounted outside factors influencing the observed industries, the results suggest that the labor market effects of marijuana legalization are large and significant for marijuana-related industries and ambiguous for non-marijuana related industries, as well as suggesting to policymakers that a well-regulated marijuana market may result in increased employment and wages in certain industries.