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Smoking and the Business Cycle: Evidence from Germany

Listed author(s):
  • Kaiser, Micha

    ()

    (University of Hohenheim)

  • Reutter, Mirjam

    ()

    (University of Hohenheim)

  • Sousa-Poza, Alfonso

    ()

    (University of Hohenheim)

  • Strohmaier, Kristina

    ()

    (Ruhr University Bochum)

In this paper, we use data from the German Socio-Economic Panel to investigate the effect on cigarette consumption of macro-economic conditions in the form of regional unemployment rates. The results from our panel data models, several of which control for selection bias, indicate that the propensity to become a smoker increases significantly during an economic downturn, with an approximately 0.7 percentage point increase for each one percentage point rise in the unemployment rate. Conversely, conditional on the individual being a smoker, cigarette consumption decreases during recessions, with a one percentage point increase in the regional unemployment rate leading to an up to 0.8 percent decrease in consumption.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10953.

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Length: 28 pages
Date of creation: Aug 2017
Handle: RePEc:iza:izadps:dp10953
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  17. Ettner, Susan L., 1997. "Measuring the human cost of a weak economy: Does unemployment lead to alcohol abuse?," Social Science & Medicine, Elsevier, vol. 44(2), pages 251-260, January.
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