This dissertation investigates the effect of obesity on labor market outcomes. Obesity is important for labor market outcomes. Obese people may be discriminated against by consumers or employers due to their distaste for obese people. Employers also may not want to hire obese people due to the expected health cost if the employers provide health insurance to their employees. Because of those consumers' and employers' distaste for obese people or because of these different costs, being obese may result in poor labor market outcomes in terms of wages and/or the likelihood of being employed, as well as sorting of obese people into jobs where slimness is not rewarded. This study used the National Longitudinal Survey of Youth 1979 (NLSY79). The NLSY79 provides panel information for a nationally representative sample of 12,686 young men and women who were 14 to 22 years old when first surveyed in 1979. The sample was followed for 14 years. Labor market outcomes were measured by (1) the probability of employment, and (2) the probability of holding occupations where slimness potentially rewards hourly wages. Weight was measured by Body Mass Index (BMI). All results were assessed separately by gender as a function of BMI splines and other controls. The endogeneity of BMI was controlled in a two-stage instrumental variable estimation model with over-identifying exogenous individual and state-level instruments, controlling for individual fixed effects. The Heckman selection model was used to control for the selection into the labor force, with the state-level identifying instruments of the nonemployment rate, the number of business establishments, and the number of Social Security Program beneficiaries. Results show that gaining weight adversely affects labor market outcomes for women, but the effect is mixed for men overall. The size and direction of the effects vary by gender, age groups, and type of occupations. Findings from this investigation could help our understanding of the economic cost of obesity to an individual beside its adverse effect on health. The spillover effect of obesity will increase the total cost of obesity to both individuals and society as a whole.