IZA DP No. 9881: Smoking Behaviour and Early Retirement Due to Chronic Disability
This paper considers the long-term effects of smoking on disability retirement. Exploiting population-wide registry data from Sweden, we contribute to the literature by accounting for a much broader range of potential confounders. In particular, by the use of sibling and twin fixed effects, we account for all unobserved heterogeneity in childhood environment and family characteristics. Moreover, we are able to control for detailed information on socioeconomic status, marital status and health. We also contribute by comparing effects on different diagnoses for which disability pension was granted, thus shedding some light on the biological mechanisms linking smoking to disability retirement. We demonstrate a strong association between smoking and disability retirement. Among individuals aged 50-64, smokers have a six percentage point higher probability of receiving (full) disability pension. However, while the relationship remains significant when accounting for confounders such as family environment, the size of the effect is much attenuated. Effects are concentrated to mental and musculoskeletal conditions, but effects on neoplasms, nervous system, eye and circulatory diagnoses are also found. The results are largely driven by health problems severe enough to merit hospitalization, and there is no evidence of a role played by financial incentives.