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Smoking and the Business Cycle: Evidence from Germany

Author

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  • Kaiser, Micha

    (Copenhagen Business School)

  • Reutter, Mirjam

    (European University Institute)

  • Sousa-Poza, Alfonso

    (University of Hohenheim)

  • Strohmaier, Kristina

    (University of Tuebingen)

Abstract

In this paper, we use data from the German Socio-Economic Panel to investigate the effect on cigarette consumption of macro-economic conditions in the form of regional unemployment rates. The results from our panel data models, several of which control for selection bias, indicate that the propensity to become a smoker increases significantly during an economic downturn, with an approximately 0.7 percentage point increase for each one percentage point rise in the unemployment rate. Conversely, conditional on the individual being a smoker, cigarette consumption decreases during recessions, with a one percentage point increase in the regional unemployment rate leading to an up to 0.8 percent decrease in consumption.

Suggested Citation

  • Kaiser, Micha & Reutter, Mirjam & Sousa-Poza, Alfonso & Strohmaier, Kristina, 2017. "Smoking and the Business Cycle: Evidence from Germany," IZA Discussion Papers 10953, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10953
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    unemployment; smoking; business cycle;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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