The Wage Effects of Personal Smoking History

Posted: 15 Feb 2011

See all articles by Irina B. Grafova

Irina B. Grafova

University of Medicine & Dentistry of New Jersey (UMDNJ)

Frank P. Stafford

University of Michigan at Ann Arbor - Department of Economics

Date Written: April 1, 2009

Abstract

This study explores determinants of the wage penalty borne by smokers. The authors reconstruct individual smoking histories by pooling PSID (Panel Study of Income Dynamics) data for 1986-2001. They find no wage gap between former smokers and those who had never smoked, but statistically significant wage gaps between smokers who would continue smoking and three other groups: those who would later quit smoking, those who had quit smoking already, and those who never smoked. The wage penalty for smoking, observed in the 1986 cross-section, is largely driven by those who would continue smoking over the years 1986-2001. These results suggest that the smoker/ nonsmoker wage differential observed at any given time may be driven by a non-causal explanation rather than by smoking per se. For example, persistent smokers may be characterized by myopia that leads to reduced investment in health capital and firm-specific or other human capital.

Keywords: smoking, wages, Panel Study of Income Dynamics

JEL Classification: I1, J3

Suggested Citation

Grafova, Irina B. and Stafford, Frank P., The Wage Effects of Personal Smoking History (April 1, 2009). Industrial and Labor Relations Review, Vol. 62, No. 3, 2009. Available at SSRN: https://ssrn.com/abstract=1761366

Irina B. Grafova (Contact Author)

University of Medicine & Dentistry of New Jersey (UMDNJ) ( email )

P.O. Box 1709
Newark, NJ 07101
United States

Frank P. Stafford

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

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