Biases in estimates of the smoking wage penalty

Silke Anger and Michael Kvasnicka

No 2006-089, SFB 649 Discussion Papers from Humboldt University Berlin, Collaborative Research Center 649: Economic Risk

Abstract: Empirical studies on the earnings effects of tobacco use have found significant wage penalties attached to smoking. We produce evidence that suggests that these estimates are significantly upward biased. The bias arises from a general failure in the literature to control for the past smoking behavior of individuals. 2SLS earnings estimates show that the smoking wage penalty is reduced by as much as a third, if past smoking of individuals is controlled for. Our results also point to significant wage gains for individuals that quit smoking, a finding that is of substantial interest, given the lack of evidence on the earnings effects of smoking cessation.

Keywords: Smoking; wages; earnings regressions (search for similar items in EconPapers)
JEL-codes: C51 I19 J31 (search for similar items in EconPapers)
Date: 2006
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Related works:
Working Paper: Biases in Estimates of the Smoking Wage Penalty (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb649:sfb649dp2006-089

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