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Substance Use and Earnings: The Case of Smokers in Germany

Author

Listed:
  • Heineck, Guido

    (University of Bamberg)

  • Schwarze, Johannes

    (University of Bamberg)

Abstract

This paper examines the effect of smoking behavior on earnings. Using data from the GSOEP, both cross-sectional and longitudinal models are estimated separately for males and females. Results for the cross-sectional models confirm prior analyses inasmuch as smoking has a negative effect on earnings for males. However, applying fixed-effects estimation, this effect is found to be inverted for men aged 25 to 35 years compared to their non-smoking counterparts. That is, controlling for unobservable individual heterogeneity, the result implies that male smokers are individuals with higher time preference rates. At the early stage of the age-earnings course higher earnings are therefore found for smokers because young male non-smokers only are about to start off their occupational career. Women’s earnings, however, are not affected by smoking behavior.

Suggested Citation

  • Heineck, Guido & Schwarze, Johannes, 2003. "Substance Use and Earnings: The Case of Smokers in Germany," IZA Discussion Papers 743, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp743
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    References listed on IDEAS

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    Cited by:

    1. Marcela V. Parada‐Contzen, 2019. "The Value of a Statistical Life for Risk‐Averse and Risk‐Seeking Individuals," Risk Analysis, John Wiley & Sons, vol. 39(11), pages 2369-2390, November.
    2. Anger, Silke & Kvasnicka, Michael, 2010. "Does Smoking Really Harm Your Earnings so Much? Biases in Current Estimates of the Smoking Wage Penalty," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 17(6), pages 561-564.
    3. Palali, Ali, 2015. "Early Smoking, Education, and Labor Market Performance," Discussion Paper 2015-033, Tilburg University, Center for Economic Research.
    4. Silke Anger & Michael Kvasnicka, 2006. "Biases in Estimates of the Smoking Wage Penalty," SFB 649 Discussion Papers SFB649DP2006-089, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    5. 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.
    6. Pierre Pestieau & Gregory Ponthiere, 2012. "Myopia, regrets, and risky behaviors," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(2), pages 288-317, April.
    7. Palali, Ali, 2017. "Early smoking, education, and labor market performance," Other publications TiSEM a3763677-b112-4fea-a9f3-5, Tilburg University, School of Economics and Management.
    8. Ali Palali, 2017. "Early Smoking, Education, and Labor Market Performance," De Economist, Springer, vol. 165(3), pages 225-270, September.
    9. Ermakov, Stepan, 2012. "The impact of smoking intensity on wages in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 25(1), pages 70-94.
    10. Lokshin, Mikhail & Sajaia, Zurab, 2007. "The Economic Cost of Smoking: Differences in Wages between Smokers and Non-smokers in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 6(2), pages 60-80.
    11. Haque, Samiul & Abedin, Naveen & Fakir, Adnan M. S. & Hannan, Rafe & Alam, Rafa, 2019. "Effects of smoking on agricultural productivity," 2019 Annual Meeting, July 21-23, Atlanta, Georgia 291149, Agricultural and Applied Economics Association.
    12. Andrew Sharpe & Alexander Murray, 2011. "State of the Evidence on Health as a Determinant of Productivity," CSLS Research Reports 2011-04, Centre for the Study of Living Standards.
    13. Nils Braakmann, 2008. "The smoking wage penality in the United Kingdom: Regression and matching evidence from the British Household Survey Panel," Working Paper Series in Economics 96, University of Lüneburg, Institute of Economics.
    14. Raufhon Salahodjaev & Nargiza Ibragimova, 2020. "Height and Life Satisfaction: Evidence from Russia," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 15(1), pages 219-237, March.
    15. Eric A. BONDZIE, 2016. "Effect of Smoking and other Economic Variables on Wages in the Euro Area," Journal of Economics Bibliography, KSP Journals, vol. 3(1), pages 38-52, March.
    16. Palali, Ali, 2015. "Early Smoking, Education, and Labor Market Performance," Other publications TiSEM b51be057-cb0e-445a-a428-4, Tilburg University, School of Economics and Management.

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    More about this item

    Keywords

    smoking; earnings regressions;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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