Wages and Employment changes associated with the introduction of food taxes and Front-of Package Labeling in Colombia

This paper examines the short-term labor market effects of Colombia’s 2022–2024 health-related reforms, which combined (i) an excise tax on ultraprocessed sugary drinks and ultra-processed foods, and (ii) an octagonal front-of-package warning label on processed and ultra-processed food and beverage products high in sugar, sodium, saturated fat, or calories. Using nationally representative labor force data and three complementary identification strategies—interrupted time series, difference-in-differences, and synthetic control—we evaluate effects on employment, income, hours worked, and informality in directly and indirectly affected sectors. Results show no statistically significant short-run changes in employment, income, or informality. The only robust adjustment occurs along the intensive margin: workers in the non-alcoholic beverage sector increased their weekly hours by roughly one hour on average. This effect is concentrated among white-collar, rural, and female workers, suggesting that firms adapted to the new regulations by adjusting workloads rather than employment levels. Overall, the evidence indicates that Colombia’s fiscal and labeling policies did not disrupt labor markets during their initial implementation. The results align with findings from Mexico, Chile, and Peru, supporting the view that well-designed “high-in” food policies can advance public health objectives without undermining employment or income stability. These findings contribute to the growing evidence base on the economic effects of food-related fiscal and informational measures in middle-income countries, offering reassurance to policymakers balancing health and labor market goals.