The incidence of the healthcare costs of smoking
Smokers earn less than non-smokers, but much is still unknown about the source(s) of the smoker's wage gap. We build on the work of Bhattacharya and Bundorf (2009), who provide evidence that obese workers receive lower wages on account of their higher expected healthcare costs. Similarly, we find that smokers who hold employer-sponsored health insurance (ESI) receive significantly lower wages than their non-smoking peers, while smokers who are not insured through their employer endure no such wage penalty. Our results have two implications: first, the incidence of smokers’ elevated medical costs appears to be borne by smokers themselves in the form of lower wages. Second, differences in healthcare costs between smokers and non-smokers are a significant source of the smoker's wage gap.
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Volume (Year): 30 (2011)
Issue (Month): 5 ()
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- Bhattacharya, Jay & Bundorf, M. Kate, 2009. "The incidence of the healthcare costs of obesity," Journal of Health Economics, Elsevier, vol. 28(3), pages 649-658, May.
- van Ours, J.C., 2002.
"A Pint a Day Raises a Man's Pay; But Smoking Blows that Gain Away,"
2002-20, Tilburg University, Center for Economic Research.
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- Jonathan Gruber, 2010. "The Tax Exclusion for Employer-Sponsored Health Insurance," NBER Working Papers 15766, National Bureau of Economic Research, Inc.
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- Miller, Vincent P. & Ernst, Carla & Collin, François, 1999. "Smoking-attributable medical care costs in the USA," Social Science & Medicine, Elsevier, vol. 48(3), pages 375-391, February.
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