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The Effect of Weight on Labor Market Outcomes: An Application of Genetic Instrumental Variables

Author

Listed:
  • Böckerman, Petri

    (Labour Institute for Economic Research)

  • Cawley, John

    (Cornell University)

  • Viinikainen, Jutta

    (Jyväskylä University School of Business and Economics)

  • Lehtimäki, Terho

    (University of Tampere)

  • Rovio, Suvi

    (University of Turku)

  • Seppälä, Ilkka

    (University of Tampere)

  • Pehkonen, Jaakko

    (Jyväskylä University School of Business and Economics)

  • Raitakari, Olli

    (University of Turku)

Abstract

The increase in the prevalence of obesity worldwide has led to great interest in the economic consequences of obesity, but valid and powerful instruments for obesity, which are needed to estimate its causal effects, are rare. This paper contributes to the literature by using a novel instrument: genetic risk score, which reflects the predisposition to higher body mass index across many genetic loci. We estimate IV models of the effect of BMI on labor market outcomes using Finnish data that have many strengths: genetic information, measured body mass index, and administrative earnings records that are free of the problems associated with nonresponse, self-reporting error or top-coding. The first stage of the IV models indicate that genetic risk score is a powerful instrument, and the available evidence from the genetics literature is consistent with instrument validity. The results of the IV models indicate weight reduces earnings and employment and increases social income transfers, although we caution that the results are based on small samples, and are sensitive to specification and subsample.

Suggested Citation

  • Böckerman, Petri & Cawley, John & Viinikainen, Jutta & Lehtimäki, Terho & Rovio, Suvi & Seppälä, Ilkka & Pehkonen, Jaakko & Raitakari, Olli, 2016. "The Effect of Weight on Labor Market Outcomes: An Application of Genetic Instrumental Variables," IZA Discussion Papers 9907, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp9907
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    References listed on IDEAS

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    Cited by:

    1. Brunello, Giorgio & Sanz-de-Galdeano, Anna & Terskaya, Anastasia, 2020. "Not only in my genes: The effects of peers’ genotype on obesity," Journal of Health Economics, Elsevier, vol. 72(C).
    2. Amin, Vikesh & Flores, Carlos A. & Flores-Lagunes, Alfonso, 2020. "The impact of BMI on mental health: Further evidence from genetic markers," Economics & Human Biology, Elsevier, vol. 38(C).
    3. Christina Hansen Edwards & Johan Håkon Bjørngaard & Jonas Minet Kinge, 2021. "The relationship between body mass index and income: Using genetic variants from HUNT as instrumental variables," Health Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 1933-1949, August.
    4. Sanz-de-Galdeano, Anna & Terskaya, Anastasia & Upegui, Angie, 2020. "Association of a Genetic Risk Score with BMI along the Life-Cycle: Evidence from Several US Cohorts," IZA Discussion Papers 13671, Institute of Labor Economics (IZA).
    5. Böckerman, Petri & Viinikainen, Jutta & Vainiomäki, Jari & Hintsanen, Mirka & Pitkänen, Niina & Lehtimäki, Terho & Pehkonen, Jaakko & Rovio, Suvi & Raitakari, Olli, 2017. "Stature and long-term labor market outcomes: Evidence using Mendelian randomization," Economics & Human Biology, Elsevier, vol. 24(C), pages 18-29.
    6. Raymundo M. Campos-Vazquez & Roy Nuñez, 2019. "Obesity and labor market outcomes in Mexico/Obesidad y el mercado de trabajo en México," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 34(2), pages 159-196.
    7. Anna Sanz-de-Galdeano & Anastasia Terskaya & Angie Upegui, 2020. "Association of a genetic risk score with BMI along the life-cycle: Evidence from several US cohorts," PLOS ONE, Public Library of Science, vol. 15(9), pages 1-19, September.
    8. Willage, Barton, 2018. "The effect of weight on mental health: New evidence using genetic IVs," Journal of Health Economics, Elsevier, vol. 57(C), pages 113-130.

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    More about this item

    Keywords

    employment; earnings; BMI; obesity; genetic instruments;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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