The Effect of Weight on Labor Market Outcomes: An Application of Genetic Instrumental Variables

47 Pages Posted: 2 May 2016

See all articles by Petri Bockerman

Petri Bockerman

Labour Institute for Economic Research; University of Turku - Turku School of Economics

John Cawley

Cornell University - College of Human Ecology, Department of Policy Analysis & Management (PAM); Cornell University - College of Arts & Sciences, Department of Economics; The University of Sydney - School of Economics; National University of Ireland, Galway (NUIG) - J.E. Cairnes School of Business & Economics; NBER; IZA

Jutta Viinikainen

University of Jyväskylä

Terho Lehtimäki

University of Turku

Suvi Rovio

University of Turku

Ilkka Seppälä

Tampere University

Jaakko Pehkonen

University of Jyväskylä - School of Business and Economics

Olli Rautakari

University of Turku

Multiple version iconThere are 2 versions of this paper

Date Written: April 2016

Abstract

The increase in the prevalence of obesity worldwide has led to great interest in the economic consequences of obesity, but valid and powerful instruments for obesity, which are needed to estimate its causal effects, are rare. This paper contributes to the literature by using a novel instrument: genetic risk score, which reflects the predisposition to higher body mass index across many genetic loci. We estimate IV models of the effect of BMI on labor market outcomes using Finnish data that have many strengths: genetic information, measured body mass index, and administrative earnings records that are free of the problems associated with non-response, self-reporting error or top-coding.The first stage of the IV models indicate that genetic risk score is a powerful instrument, and the available evidence from the genetics literature is consistent with instrument validity. The results of the IV models indicate weight reduces earnings and employment and increases social income transfers, although we caution that the results are based on small samples, and are sensitive to specification and subsample.

Suggested Citation

Bockerman, Petri and Cawley, John and Viinikainen, Jutta and Lehtimäki, Terho and Rovio, Suvi and Seppälä, Ilkka and Pehkonen, Jaakko and Rautakari, Olli, The Effect of Weight on Labor Market Outcomes: An Application of Genetic Instrumental Variables (April 2016). NBER Working Paper No. w22200. Available at SSRN: https://ssrn.com/abstract=2773430

Petri Bockerman (Contact Author)

Labour Institute for Economic Research ( email )

FIN-00530 Helsinki
Finland
+358 9 2535 7332 (Phone)
+358 9 2535 7332 (Fax)

HOME PAGE: http://www.petribockerman.fi/

University of Turku - Turku School of Economics ( email )

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Finland

John Cawley

Cornell University - College of Human Ecology, Department of Policy Analysis & Management (PAM) ( email )

3M24 MVR Hall
Ithaca, NY 14853
United States

Cornell University - College of Arts & Sciences, Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States

The University of Sydney - School of Economics ( email )

Rm 370 Merewether (H04)
Sydney, NSW 2006 2008
Australia

National University of Ireland, Galway (NUIG) - J.E. Cairnes School of Business & Economics ( email )

Galway
Ireland

NBER

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Jutta Viinikainen

University of Jyväskylä ( email )

Seminaarinkatu 30
Jyväskylä, 40100
Finland

Terho Lehtimäki

University of Turku

Turku, 20014
Finland

Suvi Rovio

University of Turku

Turku, 20014
Finland

Ilkka Seppälä

Tampere University ( email )

Tampere, FIN-33101
Finland

Jaakko Pehkonen

University of Jyväskylä - School of Business and Economics ( email )

University of Jyväskylä
PO Box 35
FIN 40351, FIN-40014
Finland

Olli Rautakari

University of Turku ( email )

Turku, 20014
Finland

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