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Smoking and Returns to Education: Empirical Evidence for Germany

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  • Julia Reilich

Abstract

Looking at smoking-behavior it can be shown that there are differences concerning the time-preference-rate. Therefore this has an effect on the optimal schooling decision in the way that we assume a lower average human capital level for smokers. According to a higher time-preference-rate we suppose a higher return to education for smokers who go further on education. With our empirical fondings we can confirm the presumptions. We use interactions-terms to regress the average rate of return with the instrumentvariable approach. Therefore we obtain that smokers have a significantly higher average return to education than non-smokers.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.390631.de/diw_sp0420.pdf
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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 420.

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Length: 8 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp420

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Keywords: Returns to education; Human Capital; Smoking Effects;

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  1. Khwaja, Ahmed & Silverman, Dan & Sloan, Frank, 2007. "Time preference, time discounting, and smoking decisions," Journal of Health Economics, Elsevier, Elsevier, vol. 26(5), pages 927-949, September.
  2. Josef Fersterer & Rudolf Winter-Ebmer, 2000. "Smoking, discount rates, and returns to education," Economics working papers, Department of Economics, Johannes Kepler University Linz, Austria 2000-02, Department of Economics, Johannes Kepler University Linz, Austria.
  3. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, Econometric Society, vol. 45(1), pages 1-22, January.
  4. David Card, 2000. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," NBER Working Papers 7769, National Bureau of Economic Research, Inc.
  5. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 17(2), pages 115-156, 04.
  6. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number minc74-1.
  7. Hessel Oosterbeek & Hans van Ophem, 2000. "Schooling choices: Preferences, discount rates, and rates of return," Empirical Economics, Springer, Springer, vol. 25(1), pages 15-34.
  8. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, National Bureau of Economic Research, Inc, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
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