Smoking and the Business Cycle: Evidence from Germany

28 Pages Posted: 31 Aug 2017

See all articles by Micha Kaiser

Micha Kaiser

Copenhagen Business School - Department of Management, Society and Communication; University of Hohenheim; Zeppelin University

Mirjam Reutter

University of Hohenheim

Alfonso Sousa-Poza

University of Hohenheim - Institute of Household and Consumer Economics; IZA Institute of Labor Economics

Kristina Strohmaier

Ruhr University of Bochum

Abstract

In this paper, we use data from the German Socio-Economic Panel to investigate the effect on cigarette consumption of macro-economic conditions in the form of regional unemployment rates. The results from our panel data models, several of which control for selection bias, indicate that the propensity to become a smoker increases significantly during an economic downturn, with an approximately 0.7 percentage point increase for each one percentage point rise in the unemployment rate. Conversely, conditional on the individual being a smoker, cigarette consumption decreases during recessions, with a one percentage point increase in the regional unemployment rate leading to an up to 0.8 percent decrease in consumption.

Keywords: business cycle, smoking, unemployment

JEL Classification: E32, I12, J22

Suggested Citation

Kaiser, Micha and Reutter, Mirjam and Sousa-Poza, Alfonso and Strohmaier, Kristina, Smoking and the Business Cycle: Evidence from Germany. IZA Discussion Paper No. 10953, Available at SSRN: https://ssrn.com/abstract=3029824

Micha Kaiser (Contact Author)

Copenhagen Business School - Department of Management, Society and Communication ( email )

University of Hohenheim ( email )

Fruwirthstr. 48
Stuttgart, 70599
Germany

Zeppelin University ( email )

Am Seemooser Horn 20
Friedrichshafen, Lake Constance 88045
Germany

Mirjam Reutter

University of Hohenheim

Fruwirthstr. 48
Stuttgart, 70599
Germany

Alfonso Sousa-Poza

University of Hohenheim - Institute of Household and Consumer Economics ( email )

Fruwirthstrasse 48
Kavaliershaus 4 116
70599 Stuttgart
Germany
++49 (0)711/459-22863 (Phone)
++49 (0)711/459-23953 (Fax)

HOME PAGE: http://www.uni-hohenheim.de/hhoek/englisch/people/alfonsosousapoza/index.html

IZA Institute of Labor Economics

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

Kristina Strohmaier

Ruhr University of Bochum ( email )

Faculty of Management and Economics
Chair of International Economics
Bochum, 44780
Germany

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