More Bad News for Smokers? The Effects of Cigarette Smoking on Labor Market Outcomes

This paper uses data from the National Longitudinal Survey of Youth to examine the effect of smoking on wages and employment. The panel nature and household structure of these data enable us to implement methods to account for differences in observed and unobserved individual characteristics that may be correlated with both smoking and wages. Changes in wages associated with changes in smoking behavior and models that utilize sibling comparisons are estimated to address the potential heterogeneity problem. Estimates from alternative specifications all indicate that smoking reduces wages by roughly 4-8%. No robust, statistically significant effect on employment is observed.

More Bad News for Smokers? The Effects of Cigarette Smoking on Labor Market Outcomes

Using National Longitudinal Survey of Youth data, the authors exam- ine the effect of smoking on wages. Their analysis controls for differ- ences in individual characteristics that may be correlated with both smoking and wages, including unobservable person-specific characteris- tics that are constant over time, and unobservable characteristics that are constant within a family. Estimates from alternative specifications indicate that smoking reduced wages by roughly 4-8%. Empirical tests of three potential explanations for this finding yield no conclusive results