Substance Use and Earnings: The Case of Smokers in Germany

Guido Heineck () and Johannes Schwarze
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Johannes Schwarze: University of Bamberg, DIW Berlin and IZA Bonn

No 743, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: This paper examines the effect of smoking behavior on earnings. Using data from the GSOEP, both cross-sectional and longitudinal models are estimated separately for males and females. Results for the cross-sectional models confirm prior analyses inasmuch as smoking has a negative effect on earnings for males. However, applying fixed-effects estimation, this effect is found to be inverted for men aged 25 to 35 years compared to their non-smoking counterparts. That is, controlling for unobservable individual heterogeneity, the result implies that male smokers are individuals with higher time preference rates. At the early stage of the age-earnings course higher earnings are therefore found for smokers because young male non-smokers only are about to start off their occupational career. Women’s earnings, however, are not affected by smoking behavior.

Keywords: smoking; earnings regressions (search for similar items in EconPapers)
JEL-codes: I12 J30 J70 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea and nep-lab
Date: 2003-03
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