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The Wage Effects of Personal Smoking History

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  • Irina B. Grafova
  • Frank P. Stafford

Abstract

This study explores determinants of the wage penalty borne by smokers. The authors reconstruct individual smoking histories by pooling PSID (Panel Study of Income Dynamics) data for 1986–2001. They find no wage gap between former smokers and those who had never smoked, but statistically significant wage gaps between smokers who would continue smoking and three other groups: those who would later quit smoking, those who had quit smoking already, and those who never smoked. The wage penalty for smoking, observed in the 1986 cross-section, is largely driven by those who would continue smoking over the years 1986–2001. These results suggest that the smoker/nonsmoker wage differential observed at any given time may be driven by a non-causal explanation rather than by smoking per se . For example, persistent smokers may be characterized by myopia that leads to reduced investment in health capital and firm-specific or other human capital.

Suggested Citation

  • Irina B. Grafova & Frank P. Stafford, 2009. "The Wage Effects of Personal Smoking History," ILR Review, Cornell University, ILR School, vol. 62(3), pages 381-393, April.
    • Handle: RePEc:sae:ilrrev:v:62:y:2009:i:3:p:381-393
    DOI: 10.1177/001979390906200307
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    Cited by:

    1. Irina B. Grafova & Alan C. Monheit, 2019. "How does actual unemployment and the perceived risk of joblessness affect smoking behavior? Gender and intra-family effects," Review of Economics of the Household, Springer, vol. 17(1), pages 201-227, March.
    2. 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.
    3. Matt Dickson, 2013. "The Causal Effect of Education on Wages Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(4), pages 477-498, August.
    4. Palali, Ali, 2015. "Early Smoking, Education, and Labor Market Performance," Discussion Paper 2015-033, Tilburg University, Center for Economic Research.
    5. Lång, Elisabeth & Nystedt, Paul, 2018. "Blowing up money? The earnings penalty of smoking in the 1970s and the 21st century," Journal of Health Economics, Elsevier, vol. 60(C), pages 39-52.
    6. Adams, Scott & Bose, Niloy & Rustichini, Aldo, 2014. "How different are smokers? An analysis based on personal finances," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 40-50.
    7. Darden, Michael E. & Hotchkiss, Julie L. & Melinda Pitts, M., 2021. "The dynamics of the smoking wage penalty," Journal of Health Economics, Elsevier, vol. 79(C).
    8. Bhai Moiz, 2020. "The Earning Losses of Smokers," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-21, March.
    9. Lennon, Conor, 2021. "Are the costs of employer-sponsored health insurance passed on to workers at the individual level?," Economics & Human Biology, Elsevier, vol. 41(C).
    10. 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.
    11. 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.
    12. Steph Clampitt & Michael Darden & Julie L. Hotchkiss & M. Melinda Pitts, 2020. "Where There's Smoke...: The Wage Impact of Smoking," Policy Hub, Federal Reserve Bank of Atlanta, vol. 2020(11), pages 1-8, October.
    13. repec:fip:a00001:89435 is not listed on IDEAS
    14. Tinna Laufey Ásgeirsdóttir & Harpa H. Berndsen & Bryndís Þ. Guðmundsdóttir & Bryndís A. Gunnarsdóttir & Hugrún J. Halldórsdóttir, 2016. "The effect of obesity, alcohol misuse and smoking on employment and hours worked: evidence from the Icelandic economic collapse," Review of Economics of the Household, Springer, vol. 14(2), pages 313-335, June.
    15. Maryam Dilmaghani, 2022. "The link between smoking, drinking and wages: Health, workplace social capital or discrimination?," Industrial Relations Journal, Wiley Blackwell, vol. 53(2), pages 160-183, March.
    16. Vidhura Tennekoon & Robert Rosenman, 2013. "Bias in Measuring Smoking Behavior," Working Papers 2013-10, School of Economic Sciences, Washington State University.
    17. Cowan, Benjamin & Schwab, Benjamin, 2011. "The incidence of the healthcare costs of smoking," Journal of Health Economics, Elsevier, vol. 30(5), pages 1094-1102.
    18. Demirgüç-Kunt, Asli & Torre, Iván, 2022. "Measuring human capital in middle income countries," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 1036-1067.
    19. 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.

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