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

Petri Böckerman (), John Cawley, Jutta Viinikainen, Terho Lehtimäki, Suvi Rovio, Ilkka Seppälä, Jaakko Pehkonen and Olli Raitakari

No 22200, NBER Working Papers from National Bureau of Economic Research, Inc

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 non-response, 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.

JEL-codes: D62 I1 I12 J01 J24 J3 J7 (search for similar items in EconPapers)
Date: 2016-04
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Published as Petri Böckerman & John Cawley & Jutta Viinikainen & Terho Lehtimäki & Suvi Rovio & Ilkka Seppälä & Jaakko Pehkonen & Olli Raitakari, 2019. "The effect of weight on labor market outcomes: An application of genetic instrumental variables," Health Economics, vol 28(1), pages 65-77.

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Journal Article: The effect of weight on labor market outcomes: An application of genetic instrumental variables (2019)
Working Paper: The Effect of Weight on Labor Market Outcomes: An Application of Genetic Instrumental Variables (2016)
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