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Smoking, Discount Rates, and Returns to Education

Author

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  • Fersterer, Josef

    (University of Linz)

  • Winter-Ebmer, Rudolf

    (Johannes Kepler University Linz)

Abstract

Individual time preference determines schooling enrolment. Moreover, smoking behavior in early ages has been shown to be highly related to time preference rates. Accordingly, we use smoking at age 16 as an instrument for schooling in order to cope with ability bias in a returns to education regression. Doing this for Austrian cross-sectional data, we find no evidence of ability bias.

Suggested Citation

  • Fersterer, Josef & Winter-Ebmer, Rudolf, 2000. "Smoking, Discount Rates, and Returns to Education," IZA Discussion Papers 126, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp126
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    References listed on IDEAS

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    1. Victor R. Fuchs, 1982. "Economic Aspects of Health," NBER Books, National Bureau of Economic Research, Inc, number fuch82-1.
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    12. Belzil, Christian & Hansen, Jörgen, 1999. "Subjective Discount Rates, Intergenerational Transfers and the Return to Schooling," IZA Discussion Papers 60, Institute of Labor Economics (IZA).
    13. Fersterer, Josef & Winter-Ebmer, Rudolf, 2003. "Are Austrian returns to education falling over time?," Labour Economics, Elsevier, vol. 10(1), pages 73-89, February.
    14. Phillip B. Levine & Tara A. Gustafson & Ann D. Velenchik, 1997. "More Bad News for Smokers? The Effects of Cigarette Smoking on Wages," ILR Review, Cornell University, ILR School, vol. 50(3), pages 493-509, April.
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    More about this item

    Keywords

    discount rates; Returns to education; instrumental variables; ability bias;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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