IDEAS home Printed from https://ideas.repec.org/p/zbw/sfb649/sfb649dp2006-089.html
   My bibliography  Save this paper

Biases in estimates of the smoking wage penalty

Author

Listed:
  • Anger, Silke
  • Kvasnicka, Michael

Abstract

Empirical studies on the earnings effects of tobacco use have found significant wage penalties attached to smoking. We produce evidence that suggests that these estimates are significantly upward biased. The bias arises from a general failure in the literature to control for the past smoking behavior of individuals. 2SLS earnings estimates show that the smoking wage penalty is reduced by as much as a third, if past smoking of individuals is controlled for. Our results also point to significant wage gains for individuals that quit smoking, a finding that is of substantial interest, given the lack of evidence on the earnings effects of smoking cessation.

Suggested Citation

  • Anger, Silke & Kvasnicka, Michael, 2006. "Biases in estimates of the smoking wage penalty," SFB 649 Discussion Papers 2006-089, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    • Handle: RePEc:zbw:sfb649:sfb649dp2006-089
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/25172/1/522661254.PDF
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.
    2. van Ours, Jan C., 2002. "A pint a day raises a man's pay; but smoking blows that gain away," IZA Discussion Papers 473, Institute of Labor Economics (IZA).
    3. van Ours, Jan C., 2004. "A pint a day raises a man's pay; but smoking blows that gain away," Journal of Health Economics, Elsevier, vol. 23(5), pages 863-886, September.
    4. Y.L. Lee, 1999. "Wage Effects of Drinking and Smoking: An analysis using Australian twins data," Economics Discussion / Working Papers 99-22, The University of Western Australia, Department of Economics.
    5. 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.
    6. 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.
    7. Heineck, Guido & Schwarze, Johannes, 2003. "Substance Use and Earnings: The Case of Smokers in Germany," IZA Discussion Papers 743, Institute of Labor Economics (IZA).
    8. M. Christopher Auld, 2005. "Smoking, Drinking, and Income," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Quit smoking!
      by chris dillow in Stumbling and Mumbling on 2007-01-15 21:33:21

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. F. Brune, Lasse, 2007. "The smoker’s wage penalty puzzle: evidence from Britain," ISER Working Paper Series 2007-31, Institute for Social and Economic Research.
    2. Ermakov, Stepan, 2012. "The impact of smoking intensity on wages in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 25(1), pages 70-94.
    3. Andrew Sharpe & Alexander Murray, 2011. "State of the Evidence on Health as a Determinant of Productivity," CSLS Research Reports 2011-04, Centre for the Study of Living Standards.
    4. Nils Braakmann, 2008. "The smoking wage penality in the United Kingdom: Regression and matching evidence from the British Household Survey Panel," Working Paper Series in Economics 96, University of Lüneburg, Institute of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anger, Silke & Kvasnicka, Michael, 2010. "Does Smoking Really Harm Your Earnings so Much? Biases in Current Estimates of the Smoking Wage Penalty," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 17(6), pages 561-564.
    2. F. Brune, Lasse, 2007. "The smoker’s wage penalty puzzle: evidence from Britain," ISER Working Paper Series 2007-31, Institute for Social and Economic Research.
    3. repec:hum:wpaper:sfb649dp2006-089 is not listed on IDEAS
    4. Pierre Pestieau & Gregory Ponthiere, 2012. "Myopia, regrets, and risky behaviors," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(2), pages 288-317, April.
    5. Ermakov, Stepan, 2012. "The impact of smoking intensity on wages in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 25(1), pages 70-94.
    6. 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.
    7. Palali, Ali, 2015. "Early Smoking, Education, and Labor Market Performance," Discussion Paper 2015-033, Tilburg University, Center for Economic Research.
    8. Palali, Ali, 2015. "Early Smoking, Education, and Labor Market Performance," Other publications TiSEM b51be057-cb0e-445a-a428-4, Tilburg University, School of Economics and Management.
    9. Eric A. BONDZIE, 2016. "Effect of Smoking and other Economic Variables on Wages in the Euro Area," Journal of Economics Bibliography, KSP Journals, vol. 3(1), pages 38-52, March.
    10. Ali Palali, 2017. "Early Smoking, Education, and Labor Market Performance," De Economist, Springer, vol. 165(3), pages 225-270, September.
    11. Heineck, Guido & Schwarze, Johannes, 2003. "Substance Use and Earnings: The Case of Smokers in Germany," IZA Discussion Papers 743, Institute of Labor Economics (IZA).
    12. Lång, Elisabeth & Nystedt, Paul, 2018. "Blowing up money? The earnings penalty of smoking in the 1970s and the 21st century," Journal of Health Economics, Elsevier, vol. 60(C), pages 39-52.
    13. Cowan, Benjamin W., 2011. "Forward-thinking teens: The effects of college costs on adolescent risky behavior," Economics of Education Review, Elsevier, vol. 30(5), pages 813-825, October.
    14. Bhai Moiz, 2020. "The Earning Losses of Smokers," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-21, March.
    15. Marcela V. Parada‐Contzen, 2019. "The Value of a Statistical Life for Risk‐Averse and Risk‐Seeking Individuals," Risk Analysis, John Wiley & Sons, vol. 39(11), pages 2369-2390, November.
    16. Clark, Andrew E. & Etile, Fabrice, 2006. "Don't give up on me baby: Spousal correlation in smoking behaviour," Journal of Health Economics, Elsevier, vol. 25(5), pages 958-978, September.
    17. Vidhura Tennekoon & Robert Rosenman, 2013. "Bias in Measuring Smoking Behavior," Working Papers 2013-10, School of Economic Sciences, Washington State University.
    18. Bengtsson, Tommy & Nilsson, Anton, 2016. "Smoking Behaviour and Early Retirement Due to Chronic Disability," IZA Discussion Papers 9881, Institute of Labor Economics (IZA).
    19. Demirgüç-Kunt, Asli & Torre, Iván, 2022. "Measuring human capital in middle income countries," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 1036-1067.
    20. Cowan, Benjamin & Schwab, Benjamin, 2011. "The incidence of the healthcare costs of smoking," Journal of Health Economics, Elsevier, vol. 30(5), pages 1094-1102.
    21. Bruce Headey & Mark Wooden & Gary Marks, 2004. "The Structure and Distribution of Household Wealth in Australia," Melbourne Institute Working Paper Series wp2004n12, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

    More about this item

    Keywords

    Smoking; wages; earnings regressions;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I19 - Health, Education, and Welfare - - Health - - - Other
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:sfb649:sfb649dp2006-089. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/sohubde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.