Smoking, Employment, and Wages: A panel data analysis

Author Name MORIKAWA Masayuki (President and CRO, RIETI)
Creation Date/NO. March 2023 23-J-010
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This study analyzes the relationship between smoking and labor market outcomes, focusing on the effects of the recent tightening of smoking restrictions and successive increases in cigarette tax rates in Japan, as well as the impact of the COVID-19 pandemic, using individual-level panel data covering the periods before and after these events. The results show that, first, while the revision of the Health Promotion Law and the COVID-19 pandemic appear to have lowered the smoking rate by about 0.8 percentage points, no additional effect of the cigarette tax hike is detected. Second, while smokers tend to have a higher probability of working and longer working hours, a causal relationship is not found. Third, unlike many previous foreign studies, a smoking wage premium is observed, but it is due to unobserved individual characteristics.