Cigarette smokers earn significantly less than nonsmokers, but the magnitude of the smoking wage gap and the pathways by which it originates are unclear. While most research focuses on contemporaneous reasons for the wage differential, the research described in this Policy Hub article finds that decisions made early in life—about education, labor force participation, and occupation—contribute significantly to the wage penalty smokers face later, especially for men. Women are found to be judged more harshly by their current employers for their smoking behavior, and since quitting smoking doesn't entirely erase the impact of early decisions, early intervention is imperative to avoid the negative wage impacts.
- Almost 90 percent of the smoking wage gap for men is determined by the impact of smoking on early in life decisions about education, work, and occupation, suggesting that programs designed to prevent youth smoking will be especially beneficial for men.
- Almost two-thirds of the smoking wage gap for women is determined by their current smoking behavior, suggesting that quitting smoking will have significant labor market benefits.
Center Affiliation: Center for Human Capital Studies
JEL classification: I10, I12
Key words: wages, smoking, dynamic system of equations, NLSY
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