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 significantwage 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 die 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 ratìier 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.
All Science Journal Classification (ASJC) codes
- Strategy and Management
- Organizational Behavior and Human Resource Management
- Management of Technology and Innovation