No Country for Fat Men? Obesity, Earnings, Skills, and Health among 450,000 Swedish Men

The negative association between obesity and labor market outcomes has been widely documented, yet little is known about the mechanisms through which the association arises. Using rich and unique data on 450,000 Swedish men enlisting for the military, we find that the crude obesity penalty in earnings, which amounts to about 18 percent, is linked to supply-side characteristics that are associated with both earnings and obesity. In particular, we show that the penalty reflects negative associations between obesity, on the one hand, and cognitive skills, non-cognitive skills, and physical fitness, on the other. Our results suggest that employers use obesity as a marker for skill limitations in order to statistically discriminate.