The Effect of Exercise on Earnings: Evidence from the NLSY

Abstract

This paper investigates whether engaging in regular exercise leads to higher earnings in the labor market. While there has been a recent surge of interest by economists on the issue of obesity, relatively little attention has been given to the economic effects of regular physical activity apart from its impact on body composition. I find that engaging in regular exercise yields a 6 to 10% wage increase. The results also show that while even moderate exercise yields a positive earnings effect, frequent exercise generates an even larger impact. These findings are fairly robust to a variety of estimation techniques, including propensity score matching.

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Notes

  1. 1.

    While the life-cycle hypothesis predicts that individuals will substitute towards leisure when wages are low (as they are during an economic downturn) it is important to bear in mind that hours worked is not a decision taken unilaterally by the worker. A significant portion of the decline in average work hours during an economic downturn is likely dictated by employers.

  2. 2.

    While hours of work may be fairly unresponsive to wage changes, individuals may respond to wage increases by decreasing the amount of time they spend on household work (by eating out more often or hiring a cleaning service) and spending more time on leisure activities or exercising. If exercise services are a normal good, then the income effect of a wage or salary increase may lead to greater consumption of these services.

  3. 3.

    The sample examined in this paper contains a maximum of two observations per individual.

  4. 4.

    Thus, I can no longer employ the categorical exercise variable. Instead, the primary PSM estimation focuses on the effects of frequent exercise.

  5. 5.

    Robustness checks address the issue of reverse causality. These tests are described later in the paper.

  6. 6.

    Only 17% of individuals who did not participate in athletics in high school report frequent exercise in the current sample compared to 27% for those who did participate in high school athletics. The percentages for exercising at least once per week are 32.7 and 47.4 for non-high school athletes and high school athletes, respectively.

  7. 7.

    Ruhm defines regular exercise as exercising three or more times a week for at least 20 min. The NLSY79 did not collect information on the duration or intensity of exercise, only the frequency.

  8. 8.

    The coefficient on black is no longer statistically significant.

  9. 9.

    Estimates using kernel and nearest neighbor matching are presented in appendix table 9 as a robustness check. The results are qualitatively similar with those obtained using the stratification matching method. In most cases, the estimates obtained using the other matching methods are even larger than the ones presented in table five.

  10. 10.

    Fitting the model using each category of exclusions separately did not yield substantially reduced coefficients on the overweight and obese variables for the part-time and extreme BMI restrictions. The large drop in the estimated coefficients occurs when low-wage workers are excluded from the sample.

  11. 11.

    In order to meet the balancing criterion, the occupation and year indicators were dropped from the first stage of the estimation routine for both samples. Neither the occupation nor the year indicators exhibited a significant correlation with the exercise variable in the first stage indicating that it is safe to exclude them.

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Correspondence to Vasilios D. Kosteas.

Appendix

Appendix

Table 9 Robustness check using alternative matching estimators
Table 10 Results including weeks spent in training
Table 11 Additional Robustness checks

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Kosteas, V.D. The Effect of Exercise on Earnings: Evidence from the NLSY. J Labor Res 33, 225–250 (2012). https://doi.org/10.1007/s12122-011-9129-2

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Keywords

  • Exercise
  • Earnings
  • Obesity
  • Propensity score matching

JEL Codes

  • I19
  • J21