"Even one cigarette is enough to trigger a smoking wage differential," is among the findings of a new (Federal Reserve sponsored) research study that shows smokers on average earn 19% less than non-smokers ($13.101 vs $16.261). Perhaps most interestingly, the researchers note that once you have been a smoker, you may as well smoke a pack a day as the differential is little affected by frequency. Once again, taxpayer money well-spent by the researchers at the Fed... Given these findings (and PhD logic) we suspect the Fed will introduce Quantitative Wheezing - aimed at 'rebalancing' the smoking imbalances... and boosting smokers' income by 24%...
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Abstract:
It is well known that smoking leads to lower wages. However, the mechanism of this negative relationship is not well understood. This analysis includes a decomposition of the wage gap between smokers and nonsmokers, with a variety of definitions of smoking status designed to reflect differences in smoking intensity. This paper finds that nearly two-thirds of the 24 percent selectivity-corrected smoking/nonsmoking wage differential derives from differences in characteristics between smokers and nonsmokers. These results suggest that it is not differences in productivity that drive the smoking wage gap. Rather, it is differences in the endowments smokers bring to the market along with unmeasured factors, such as baseline employer tolerance. In addition, we also determine that even one cigarette per day is enough to trigger the smoking wage gap and that this gap does not vary by smoking intensity.
Full paper below...
Smoking Costs [4]