Effects and Channels of Smoking on College Students’ Labor Market Performance

Abstract

This study investigates the impact of smoking on the labor market performance of college graduates, utilizing representative data from South Korea. To mitigate endogeneity concerns, we employ the average cigarette price during participants’ college years as an instrumental variable for smoking behaviors. The findings reveal a detrimental effect of smoking on the labor market outcomes of college students. Smokers are significantly less likely to secure employment, and if employed, they tend to earn lower salaries. Notably, these adverse effects are more pronounced among female students. Through a behavioral and human capital lens, we discern the mechanism by which smoking impairs labor market performance. While smoking may initially contribute to positive aspects such as enhanced social activities, subjective mental health, and psychological stability among college students, it is concurrently associated with lower academic achievement, impeding human capital accumulation. These results suggest that although smoking may yield short-term benefits, it undermines long-term human capital development. The implications advocate for governmental intervention to mitigate the negative consequences of youth smoking.