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The effect of habitual smoking on labour productivity

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  • Michio Yuda

Abstract

This article investigates the effect of habitual smoking on full-time employees' hourly wages, which represent one of the social costs of smoking. Because the decision whether to smoke is affected by the cigarette tax level and by various socioeconomic factors, it is appropriate that we treat smoking indicators as endogenous in econometric analyses. To control this endogeneity, I use the levels of state and federal cigarette taxes per package and family attributes as instrumental variables for habitual smoking. According to the estimation results, there is no difference in wages between smokers and nonsmokers of both genders after appropriately controlling for the endogeneity of smoking. This result is different from the results of most previous studies, most of which suffer from several methodological problems. I also found that cigarette taxes have a strong impact on smoking participation for both genders. However, it is also found that cigarette taxes do not make smokers without rationality quit smoking.

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  • Michio Yuda, 2011. "The effect of habitual smoking on labour productivity," Applied Economics Letters, Taylor & Francis Journals, vol. 18(12), pages 1125-1132.
    • Handle: RePEc:taf:apeclt:v:18:y:2011:i:12:p:1125-1132
    DOI: 10.1080/13504851.2010.526568
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    References listed on IDEAS

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    1. Kan, Kamhon, 2007. "Cigarette smoking and self-control," Journal of Health Economics, Elsevier, vol. 26(1), pages 61-81, January.
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    7. Phillip B. Levine & Tara A. Gustafson & Ann D. Velenchik, 1995. "More Bad News for Smokers? The Effects of Cigarette Smoking on Labor Market Outcomes," NBER Working Papers 5270, National Bureau of Economic Research, Inc.
    8. Mark Stehr, 2007. "The effect of cigarette taxes on smoking among men and women," Health Economics, John Wiley & Sons, Ltd., vol. 16(12), pages 1333-1343.
    9. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
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    1. Haque, Samiul & Abedin, Naveen & Fakir, Adnan M. S. & Hannan, Rafe & Alam, Rafa, 2019. "Effects of smoking on agricultural productivity," 2019 Annual Meeting, July 21-23, Atlanta, Georgia 291149, Agricultural and Applied Economics Association.
    2. Sun, Yawen, 2019. "Smoking and wage rates – Evidence from Japanese panel data," Japan and the World Economy, Elsevier, vol. 49(C), pages 138-150.

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