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Inequality of the crowding-out effect of tobacco expenditure in Colombia

Author

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  • Gallego, J. M
  • Paraje, G
  • Rodríguez-Lesmes, P

Abstract

In recent decades, policy initiatives involving increases in the tobacco tax have increased pressure on budget allocations in poor households. In this study, we examine this issue in the context of the expansion of the social welfare state that has taken place over the last two decades in several emerging economies. This study explores the case of Colombia between 1997 and 2011. In this period, the budget share of the poorest expenditure quintile devoted to tobacco products of smoker’s households doubled. We analyse the differences between the poorest and richest quintiles in relation to the changes in budget shares, fixing a reference population over time to avoid demographic composition confounders. We find no evidence of crowding-out of education, or healthcare expenditures. This is likely to be the result of free universal access to health insurance and basic education for the poor. For higher income households, tobacco crowds-out expenditures on entertainment, leisure activities, and luxury expenditures. This finding should reassure policy-makers who are keen to impose tobacco taxes as an element of their public health policy

Suggested Citation

  • Gallego, J. M & Paraje, G & Rodríguez-Lesmes, P, 2022. "Inequality of the crowding-out effect of tobacco expenditure in Colombia," Documentos de Trabajo 20304, Universidad del Rosario.
    • Handle: RePEc:col:000092:020304
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    References listed on IDEAS

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    Keywords

    Tobacco expenditure; Poverty; Crowding out; Household expenditure; Health Inequalities;
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