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The incidence of the healthcare costs of smoking

Benjamin Cowan () and Benjamin Schwab

Journal of Health Economics, 2011, vol. 30, issue 5, 1094-1102

Abstract: Smokers earn less than non-smokers, but much is still unknown about the source(s) of the smoker's wage gap. We build on the work of Bhattacharya and Bundorf (2009), who provide evidence that obese workers receive lower wages on account of their higher expected healthcare costs. Similarly, we find that smokers who hold employer-sponsored health insurance (ESI) receive significantly lower wages than their non-smoking peers, while smokers who are not insured through their employer endure no such wage penalty. Our results have two implications: first, the incidence of smokers’ elevated medical costs appears to be borne by smokers themselves in the form of lower wages. Second, differences in healthcare costs between smokers and non-smokers are a significant source of the smoker's wage gap.

Keywords: Smoking; Wages; Employer-sponsored health insurance; Compensating differential (search for similar items in EconPapers)
JEL-codes: I1 J3 J7 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:30:y:2011:i:5:p:1094-1102

DOI: 10.1016/j.jhealeco.2011.07.003

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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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