Stature and long-term labor market outcomes: Evidence using Mendelian randomization

- Taller people have higher earnings.
- We use genetic instruments for height.
- The OLS models show that 10 cm of extra height increases earnings by 13%.
- The IV point estimate is lower at 9% and not statistically significant.

We use the Young Finns Study (N = ∼2000) on the measured height linked to register-based long-term labor market outcomes. The data contain six age cohorts (ages 3, 6, 9, 12, 15 and 18, in 1980) with the average age of 31.7, in 2001, and with the female share of 54.7. We find that taller people earn higher earnings according to the ordinary least squares (OLS) estimation. The OLS models show that 10 cm of extra height is associated with 13% higher earnings. We use Mendelian randomization, with the genetic score as an instrumental variable (IV) for height to account for potential confounders that are related to socioeconomic background, early life conditions and parental investments, which are otherwise very difficult to fully account for when using covariates in observational studies. The IV point estimate is much lower and not statistically significant, suggesting that the OLS estimation provides an upward biased estimate for the height premium. Our results show the potential value of using genetic information to gain new insights into the determinants of long-term labor market success.