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The smoker’s wage penalty puzzle: evidence from Britain

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  • F. Brune, Lasse

Abstract

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 crosssectional 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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  • F. Brune, Lasse, 2007. "The smoker’s wage penalty puzzle: evidence from Britain," ISER Working Paper Series 2007-31, Institute for Social and Economic Research.
    • Handle: RePEc:ese:iserwp:2007-31
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    3. Wang, Haining & Smyth, Russell & Cheng, Zhiming, 2017. "The economic returns to proficiency in English in China," China Economic Review, Elsevier, vol. 43(C), pages 91-104.

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