Using National Longitudinal Survey of Youth data, the authors exam- ine the effect of smoking on wages. Their analysis controls for differ- ences in individual characteristics that may be correlated with both smoking and wages, including unobservable person-specific characteris- tics that are constant over time, and unobservable characteristics that are constant within a family. Estimates from alternative specifications indicate that smoking reduced wages by roughly 4-8%. Empirical tests of three potential explanations for this finding yield no conclusive results.
Levine, Phillip B., Tara A. Gustafson, and Ann D. Velenchik. "More Bad News for Smokers? The Effects of Cigarette Smoking on Labor Market Outcomes." Industrial and Labor Relations Review, April 1997, pp. 493-509.