Silke Anger, Michael Kvasnicka
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. Our results from pooled OLS regressions of wages on smoking status for ever smokers (smokers, former smoker) point to a large wage gain from smoking cessation. This gain disappears once we control for individual fixed effects, which suggests that the apparent wage gain attached to smoking cessation is the result of a pure selection effect. However, when adding controls for (past) smoking duration and time elapsed since quitting, individuals who did not smoke very long or who quit many years ago do appear to benefit in their earnings from quitting smoking. Both a selection effect and a causal effect of smoking cessation hence seem to underlie the average wage gains attached to quitting in our data. 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.
Themen: Arbeit und Beschäftigung
JEL-Classification: J31;I19;C51
Keywords: Smoking cessation, smoking wage penalty, earnings regressions
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