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The incidence of the healthcare costs of smoking

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  • Cowan, Benjamin
  • Schwab, Benjamin

Abstract

Smokers earn less than non-smokers, but much is still unknown about the source(s) of the smoker's wage gap. We build on the work of Bhattacharya and Bundorf (2009), who provide evidence that obese workers receive lower wages on account of their higher expected healthcare costs. Similarly, we find that smokers who hold employer-sponsored health insurance (ESI) receive significantly lower wages than their non-smoking peers, while smokers who are not insured through their employer endure no such wage penalty. Our results have two implications: first, the incidence of smokers’ elevated medical costs appears to be borne by smokers themselves in the form of lower wages. Second, differences in healthcare costs between smokers and non-smokers are a significant source of the smoker's wage gap.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 30 (2011)
Issue (Month): 5 ()
Pages: 1094-1102

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Handle: RePEc:eee:jhecon:v:30:y:2011:i:5:p:1094-1102

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Web page: http://www.elsevier.com/locate/inca/505560

Related research

Keywords: Smoking; Wages; Employer-sponsored health insurance; Compensating differential;

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References

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  1. Irina B. Grafova & Frank P. Stafford, 2009. "The Wage Effects of Personal Smoking History," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 62(3), pages 381-393, April.
  2. Phillip B. Levine & Tara Gustafson & Ann D. Velenchik, 1997. "More bad news for smokers? The effects of cigarette smoking on wages," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(3), pages 493-509, April.
  3. M. Christopher Auld, 2005. "Smoking, Drinking, and Income," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
  4. Ours, J.C. van, 2004. "A pint a day raises a man's pay, but smoking blows that gain away," Open Access publications from Tilburg University urn:nbn:nl:ui:12-140957, Tilburg University.
  5. 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.
  6. W. Kip Viscusi & Joni Hersch, 2001. "Cigarette Smokers As Job Risk Takers," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 269-280, May.
  7. Jonathan Gruber, 2010. "The Tax Exclusion for Employer-Sponsored Health Insurance," NBER Working Papers 15766, National Bureau of Economic Research, Inc.
  8. Miller, Vincent P. & Ernst, Carla & Collin, François, 1999. "Smoking-attributable medical care costs in the USA," Social Science & Medicine, Elsevier, vol. 48(3), pages 375-391, February.
  9. Bhattacharya, Jay & Bundorf, M. Kate, 2009. "The incidence of the healthcare costs of obesity," Journal of Health Economics, Elsevier, vol. 28(3), pages 649-658, May.
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Cited by:
  1. Vidhura Tennekoon & Robert Rosenman, 2013. "Bias in Measuring Smoking Behavior," Working Papers 2013-10, School of Economic Sciences, Washington State University.

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