This work investigates the effect of smoking on wages for male workers using panel data from Britain for the period of 1991–2005. The strong negative correlation of smoking and wages found in a cross- sectional analysis reduces substantially when accounting for unobserved individual heterogeneity using Fixed Effects estimation. I find a statistically significant wage penalty that is causally due to smoking of about –2% for smokers over those who quit. Further analysis indicates, however, that the negative effect might be underestimated when comparing with those who never started smoking or quit a long time ago.
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Paper provided by Institute for Social and Economic Research in its series ISER working papers with number
2007-31.
Length: 44 Date of creation: Dec 2007 Date of revision: Handle: RePEc:ese:iserwp:2007-31
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