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Where Does the Wage Penalty Bite?

In: Economic Aspects of Obesity

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  • Christian A. Gregory
  • Christopher J. Ruhm

Abstract

The literature examining the relationship between body mass index (BMI) and wages has fairly consistently found that BMI has a negative impact on earnings for women, and less (if any) consequences for men. In this paper, we relax the assumption -- largely unquestioned in this research -- that the conditional mean of wages is linear or piecewise linear in body mass index (BMI). Using data from the 1986 and 1999-2005 Panel Study of Income Dynamics, we estimate semi-parametric wage models that allow earnings to vary with BMI in a highly flexible manner. For women, the results show that earnings peak at levels far below the clinical threshold of "obesity" or even "overweight". For men, our main estimates suggest a reasonably flat BMI-wage profile that peaks early in the "overweight" category. However, the results of instrumental variables (IV) models or specifications focusing on long-lags of BMI are more similar to those for women. The findings for females (and the IV estimates for males) suggest that it is not obesity but rather some other factor -- such as physical attractiveness -- that produces the observed relationship between BMI and wages. We also provide non-parametric estimates of the association between BMI and health expenditures, using data from the Medical Expenditure Panel Survey. These cast further doubt on the hypothesis that the wage penalties associated with increasing BMI occur because the latter serve as an index for underlying medical costs.

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This chapter was published in:

  • Michael Grossman & Naci H. Mocan, 2011. "Economic Aspects of Obesity," NBER Books, National Bureau of Economic Research, Inc, number gros09-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 11824.

    Handle: RePEc:nbr:nberch:11824

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    1. Duncan, Greg J & Hill, Daniel H, 1985. "An Investigation of the Extent and Consequences of Measurement Error in Labor-Economic Survey Data," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 3(4), pages 508-32, October.
    2. Jay Bhattacharya & M. Kate Bundorf, 2005. "The Incidence of the Healthcare Costs of Obesity," NBER Working Papers 11303, National Bureau of Economic Research, Inc.
    3. Markus M. Mobius & Tanya S. Rosenblat, 2006. "Why Beauty Matters," American Economic Review, American Economic Association, American Economic Association, vol. 96(1), pages 222-235, March.
    4. Wada, Roy & Tekin, Erdal, 2010. "Body composition and wages," Economics & Human Biology, Elsevier, Elsevier, vol. 8(2), pages 242-254, July.
    5. Chou, Shin-Yi & Grossman, Michael & Saffer, Henry, 2004. "An economic analysis of adult obesity: results from the Behavioral Risk Factor Surveillance System," Journal of Health Economics, Elsevier, Elsevier, vol. 23(3), pages 565-587, May.
    6. Susan Averett & Sanders Korenman, 1996. "The Economic Reality of the Beauty Myth," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 304-330.
    7. Jeff E. Biddle & Daniel S. Hamermesh, 1995. "Beauty, Productivity and Discrimination: Lawyers' Looks and Lucre," NBER Working Papers 5366, National Bureau of Economic Research, Inc.
    8. Brendan Kline & Justin L. Tobias, 2008. "The wages of BMI: Bayesian analysis of a skewed treatment-response model with nonparametric endogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 23(6), pages 767-793.
    9. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, Elsevier, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
    10. John Cawley, 2004. "The Impact of Obesity on Wages," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    11. Harper, Barry, 2000. " Beauty, Stature and the Labour Market: A British Cohort Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(0), pages 771-800, Special I.
    12. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, Econometric Society, vol. 65(3), pages 557-586, May.
    13. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, Econometric Society, vol. 56(4), pages 931-54, July.
    14. Mocan, Naci & Tekin, Erdal, 2006. "Ugly Criminals," IZA Discussion Papers 2048, Institute for the Study of Labor (IZA).
    15. Bound, John, et al, 1994. "Evidence on the Validity of Cross-Sectional and Longitudinal Labor Market Data," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 12(3), pages 345-68, July.
    16. Charles L. Baum & William F. Ford, 2004. "The wage effects of obesity: a longitudinal study," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 885-899.
    17. John Cawley & Richard V. Burkhauser, 2006. "Beyond BMI: The Value of More Accurate Measures of Fatness and Obesity in Social Science Research," NBER Working Papers 12291, National Bureau of Economic Research, Inc.
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    Cited by:
    1. Pierre Chiapore & Climent Quintana Domeque & Sonia Oreffice, 2010. "Fatter attraction: anthropometric and socieconomic matching on the marriage market," Working Papers. Serie AD, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) 2010-23, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. Scott A. Carson, 2013. "US Male Obesity from 1800-2000: A Long Term Perspective," CESifo Working Paper Series 4366, CESifo Group Munich.
    3. Roy Wada & Erdal Tekin, 2007. "Body Composition and Wages," NBER Working Papers 13595, National Bureau of Economic Research, Inc.
    4. Oreffice, Sonia & Quintana-Domeque, Climent, 2010. "Anthropometry and socioeconomics among couples: Evidence in the United States," Economics & Human Biology, Elsevier, Elsevier, vol. 8(3), pages 373-384, December.
    5. Sonia Oreffice & Climent Quintana-Domeque, 2012. "A Matter of Weight? The Role of Spouses. Physical Attractiveness on Hours of Work," CHILD Working Papers Series, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA 7, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    6. Chiappori, Pierre-André & Oreffice, Sonia & Quintana-Domeque, Climent, 2009. "Fatter Attraction: Anthropometric and Socioeconomic Characteristics in the Marriage Market," IZA Discussion Papers 4594, Institute for the Study of Labor (IZA).
    7. Charles Courtemanche & Joshua C. Pinkston & Jay Stewart, 2014. "Adjusting Body Mass for Measurement Error with Invalid Validation Data," NBER Working Papers 19928, National Bureau of Economic Research, Inc.
    8. Chiappori, Pierre-André & Oreffice, Sonia & Quintana-Domeque, Climent, 2011. "Black-White Marital Matching: Race, Anthropometrics, and Socioeconomics," IZA Discussion Papers 6196, Institute for the Study of Labor (IZA).
    9. Sonia Oreffice & Climent Quintana-Domeque, 2012. "Fat spouses and hours of work: are body and Pareto weights correlated?," IZA Journal of Labor Economics, Springer, Springer, vol. 1(1), pages 1-21, December.
    10. Averett, Susan L. & Argys, Laura & Kohn, Jennifer L., 2012. "Immigration, Obesity and Labor Market Outcomes in the UK," IZA Discussion Papers 6454, Institute for the Study of Labor (IZA).

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