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Even one is too much: the economic consequences of being a smoker

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Author Info

  • Hotchkiss, Julie L.

    ()
    (Federal Reserve Bank of Atlanta)

  • Pitts, M. Melinda

    ()
    (Federal Reserve Bank of Atlanta)

Abstract

It is well known that smoking leads to lower wages. However, the mechanism of this negative relationship is not well understood. This analysis includes a decomposition of the wage gap between smokers and nonsmokers, with a variety of definitions of smoking status designed to reflect differences in smoking intensity. This paper finds that nearly two-thirds of the 24 percent selectivity-corrected smoking/nonsmoking wage differential derives from differences in characteristics between smokers and nonsmokers. These results suggest that it is not differences in productivity that drive the smoking wage gap. Rather, it is differences in the endowments smokers bring to the market along with unmeasured factors, such as baseline employer tolerance. In addition, we also determine that even one cigarette per day is enough to trigger the smoking wage gap and that this gap does not vary by smoking intensity.

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File URL: http://www.frbatlanta.org/documents/pubs/wp/wp1303.pdf
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Bibliographic Info

Paper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2013-03.

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Length: 32 pages
Date of creation: 01 Jul 2013
Date of revision:
Handle: RePEc:fip:fedawp:2013-03

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Related research

Keywords: smoking wage penalty; wage decomposition; wage differentials;

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. How smoking hurts you on the labor market
    by Economic Logician in Economic Logic on 2013-09-06 14:33:00
  2. #HEJC papers for August 2013
    by academichealtheconomists in The Academic Health Economists' Blog on 2013-07-31 23:00:48

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