Effect of smoking and other economic variables on wages in the Euro Area.

Bondzie, Eric Amoo (2016): Effect of smoking and other economic variables on wages in the Euro Area.

Abstract

The smoking effects on wages has been examined in this work using different econometric methodologies with the use of European Community Household Panel (ECHP) datasets. We employ econometric tools like Instrumental Variable technique, Heckman correction factor, Endogenous Switching and Matching estimates. The initial results from regression estimates (OLS and IV methods) revealed that the wage gap between smokers and non-smokers ranges 1% to 22.7%. Moreover, endogenous switching and matching estimator also showed a negative average treatment effect of approximately 47% and 4.3% to 6.9% respectively. Thus smokers observed less wage effects is explained in part by real effects on their health status and a measure of unobserved preferences.

• Item Type: MPRA Paper
• Language: English
• Keywords: Smoking, Wages differentials, Econometric Approaches and Euro Area.
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C18 - Methodological Issues: General; I - Health, Education, and Welfare > I1 - Health > I12 - Health Behavior; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O52 - Europe

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