Vorträge des DIW Berlin

Abstract:

A growing body of literature has investigated the wage penalty attached to smoking. Little research, in contrast, has been done on the wage effects of smoking cessation. Using survey panel data from Germany, we study the relative earnings of smokers and former smokers over an extended period of time. We control for selection into smoking by imposing smoking initiation as the common initial condition and exclusively focusing on ever smokers, i.e. smokers and former smokers. Although we do not find evidence for an average wage premium of smoking cessation, our estimates point to heterogeneous causal effects. Individuals who did not smoke very long or who quit many years ago do appear to benefit in their earnings from quitting smoking. The prospect of a higher paycheck for short-time smokers and long-term quitters provides an additional incentive to smokers to quit smoking, an argument health authorities may want to utilize in public smoking cessation campaigns.

JEL-Classification:

J31, I19, C51

Keywords:

Smoking cessation, smoking wage penalty, earnings regressions