Does body weight affect wages?

Abstract

We use data from the European Community Household Panel to investigate the impact of body weight on wages in nine European countries. When we pool the available data across countries and years, we find that a 10% increase in the average body mass index reduces the real earnings of males and females by 3.27% and 1.86%, respectively. Since European culture, society and labour market are heterogeneous, we estimate separate regressions for Northern and Southern Europe and find that the negative impact of the body mass index on earnings is larger – and statistically significant – in the latter area.

Introduction

A growing literature documents the relationship between physical appearance and labour market outcomes in developed countries (Heineck, 2005, Cawley, 2004, Persico et al., 2004, Cawley and Danziger, 2000, Hamermesh and Biddle, 1994, Averett and Korenman, 1996, Register and Williams, 1990). One key indicator of physical appearance is body weight in kilograms related to (squared) height in meters, or the body mass index (henceforth BMI). The available empirical evidence suggests that this index is negatively correlated with wages. While most of the evidence is based on US data, there are also a few recent studies, which focus on Europe (Fahr, 2006, Sousa, 2005, Paraponaris et al., 2005, Garcia and Quintana-Domeque, in press).¹

Excessive body weight, or obesity (defined as BMI > 30), has been shown to be an handicap to social advancement, especially for women. The consequences of obesity are numerous, both in terms of an increase in health problems (diabetes, cardiovascular diseases, hypertension) and in terms of the adverse impact on the quality of life. On the one hand, obesity may hamper productivity. On the other hand, when labour markets are imperfect and there is asymmetric information about individual productivity, obese individuals may be discriminated if employers believe that they are less productive and less healthy than the rest of the population (Aigner and Cain, 1977). Taste discrimination by employers and/or customers, and cultural factors may also result in differentiated treatment based on physical attributes as the ideal body proportions advocated in the media is one of normal weight (Becker, 1971). Moreover, individual self-esteem – and the reservation wage – might depend on physical attributes.² Finally, employers may also not want to hire workers with a high discount rate of the future, who are more likely to be obese (Komlos et al., 2004).

In this paper, we explore the impact of BMI on wages in nine European countries, using information from the European Community Household Panel, a dataset explicitly designed to favour international comparisons. Any such exploration must confront the fact that a correlation between BMI and wages need not imply a causal relationship running from the former to the latter. The uncovered correlation could in fact reflect both that body weight affects wages and/or that wages affect body weight. We follow Cawley, 2000, Cawley, 2004 and Cawley et al. (2005), and use information on the BMI of parents, siblings and children to construct an estimate of the relationship between BMI and wages based on instrumental variables.

We find that BMI affects wages negatively in Europe, and that the size of this effect is larger for males than for females. The uncovered relationship is much stronger on average in the countries of the “olive belt” of Europe – Spain, Greece, Italy and Portugal – than in the countries of the “beer belt” (Austria, Ireland, Denmark, Belgium and Finland), and statistically significant only in the former group of countries. This result is consistent with the higher concern about weight expressed by Southern Europeans in a recent Eurobarometer survey (European and Commission, 2006). Part of this concern could be due to the larger negative labour market effects of an increase in body weight.

It is an open question whether the larger negative impact of BMI on pay in the “olive belt” of Europe is due to the larger negative productivity effects associated with an increase in weight, or to the stronger discrimination against the overweight or obese. While we leave this question to further investigation, in this paper we focus on the role of the local environment and find that living in a region with higher than national average BMI has a moderate but statistically significant effect on the relationship between BMI and pay, both in the “olive” and in the “beer” belt. Moreover, the direction of this effect varies with gender. We explain this difference with the interaction of two factors at play in local labour markets, the stigma effect and the relative labour supply effect. On the one hand, the social stigma associated with relatively high body weight is less relevant in areas where a higher share of the population is overweight. This contributes to reduce the negative effect of higher weight on earnings. On the other hand, overweight individuals in areas with a higher density of overweight population may face less favourable labour market conditions, because the relative supply of individuals with similar weight is more plentiful. Therefore, the labour supply effect increases the negative impact of higher weight on earnings. According to our findings, the former effect prevails for males, and the latter effect matters more for females.