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Cross-border health and productivity effects of alcohol policies

  • Johansson, Per

    ()

    (IFAU - Institute for Evaluation of Labour Market and Education Policy)

  • Pekkarinen, Tuomas

    (Aalto University School of Economics)

  • Verho, Jouko

    (The Social Insurance Institution of Finland)

This paper studies the cross-border health and productivity effects of alcohol taxes. We estimate the effect of a large cut in the Finnish alcohol tax on mortality, alcohol related illnesses and work absenteeism in Sweden. This tax cut led to large differences in the prices of alcoholic beverages between these two countries and to a considerable increase in cross-border shopping. The effect is identified using differences-in-differences strategy where changes in these outcomes in regions near the Finnish border are compared to changes in other parts of northern Sweden. We use register data where micro level data on deaths, hospitalisations and absenteeism is merged to population-wide micro data on demographics and labour market outcomes. Our results on the effect of the Finnish tax cut on mortality and alcohol-related hospitalisations in Sweden are very imprecise. However,we find that workplace absenteeism increased by 5% for males and by 13% for females near the Finnish border as a result of the tax cut.

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Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2012:10.

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Length: 27 pages
Date of creation: 02 May 2012
Date of revision:
Publication status: Forthcoming as Johansson, Per, Tuomas Pekkarinen and Jouko Verho, 'Cross-border health and productivity effects of alcohol policies' in Journal of Health Economics, 2014, pages 126-136.
Handle: RePEc:hhs:ifauwp:2012_010
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  1. Padmaja Ayyagari & Partha Deb & Jason Fletcher & William T. Gallo & Jody L. Sindelar, 2009. "Sin Taxes: Do Heterogeneous Responses Undercut Their Value?," NBER Working Papers 15124, National Bureau of Economic Research, Inc.
  2. Friberg, Richard & Asplund, Marcus & Wilander, Fredrik, 2005. "Demand and Distance: Evidence on Cross-Border Shopping," SSE/EFI Working Paper Series in Economics and Finance 587, Stockholm School of Economics.
  3. Philip DeCicca & Donald S. Kenkel & Feng Liu, 2010. "Excise Tax Avoidance: The Case of State Cigarette Taxes," NBER Working Papers 15941, National Bureau of Economic Research, Inc.
  4. Robert L. Ohsfeldt & Michael A. Morrisey, 1997. "Beer Taxes, Workers' Compensation, And Industrial Injury," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 155-160, February.
  5. David Merriman, 2010. "The Micro-geography of Tax Avoidance: Evidence from Littered Cigarette Packs in Chicago," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 61-84, May.
  6. Johansson, Per & Palme, Marten, 1996. "Do economic incentives affect work absence? Empirical evidence using Swedish micro data," Journal of Public Economics, Elsevier, vol. 59(2), pages 195-218, February.
  7. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
  8. Caroline Hall & Laura Hartman, 2010. "Moral hazard among the sick and unemployed: evidence from a Swedish social insurance reform," Empirical Economics, Springer, vol. 39(1), pages 27-50, August.
  9. Manning, Willard G. & Blumberg, Linda & Moulton, Lawrence H., 1995. "The demand for alcohol: The differential response to price," Journal of Health Economics, Elsevier, vol. 14(2), pages 123-148, June.
  10. Sijbren Cnossen, 2007. "Alcohol taxation and regulation in the European Union," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(6), pages 699-732, December.
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