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Does smoking really harm your earnings so much? Biases in current estimates of the smoking wage penalty

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Author Info

  • Silke Anger
  • Michael Kvasnicka

Abstract

Empirical studies on the earnings effects of tobacco use have found significant wage penalties attached to smoking. This article produces evidence that suggests that these estimates are significantly upward biased. The bias arises from a general failure in the literature to control for past smoking behaviour of individuals. Two-Stage Least Squares (2SLS) regressions show that the smoking wage penalty is reduced by as much as a third, if past smoking of individuals is controlled for.

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File URL: http://www.informaworld.com/openurl?genre=article&doi=10.1080/13504850802260846&magic=repec&7C&7C8674ECAB8BB840C6AD35DC6213A474B5
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics Letters.

Volume (Year): 17 (2010)
Issue (Month): 6 ()
Pages: 561-564

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Handle: RePEc:taf:apeclt:v:17:y:2010:i:6:p:561-564

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  1. 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.
  2. Heineck, Guido & Schwarze, Johannes, 2003. "Substance Use and Earnings: The Case of Smokers in Germany," IZA Discussion Papers 743, Institute for the Study of Labor (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. M. Christopher Auld, 2005. "Smoking, Drinking, and Income," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
  5. 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.
  6. Christian Bantle & John P. Haisken-DeNew, 2002. "Smoke Signals: The Intergenerational Transmission of Smoking Behavior," Discussion Papers of DIW Berlin 277, DIW Berlin, German Institute for Economic Research.
  7. Clark, Andrew E. & Etilé, Fabrice, 2005. "Don't Give Up On Me Baby: Spousal Correlation in Smoking Behaviour," IZA Discussion Papers 1692, Institute for the Study of Labor (IZA).
  8. 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.
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Cited by:
  1. Pierre Pestieau & Gregory Ponthiere, 2012. "Myopia, regrets, and risky behaviors," International Tax and Public Finance, Springer, vol. 19(2), pages 288-317, April.

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