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Cross-Border Health and Productivity Effects of Alcohol Policies


  • Johansson, Per

    () (Uppsala University)

  • Pekkarinen, Tuomas

    () (VATT, Helsinki)

  • Verho, Jouko Kullervo

    () (VATT, Helsinki)


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.

Suggested Citation

  • Johansson, Per & Pekkarinen, Tuomas & Verho, Jouko Kullervo, 2012. "Cross-Border Health and Productivity Effects of Alcohol Policies," IZA Discussion Papers 6389, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6389

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    References listed on IDEAS

    1. 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.
    2. Johansson, Per & Palme, Marten, 2005. "Moral hazard and sickness insurance," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1879-1890, September.
    3. 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.
    4. 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.
    5. 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.
    6. Asplund, Marcus & Friberg, Richard & Wilander, Fredrik, 2007. "Demand and distance: Evidence on cross-border shopping," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 141-157, February.
    7. 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.
    8. DeCicca, Philip & Kenkel, Donald & Liu, Feng, 2013. "Excise tax avoidance: The case of state cigarette taxes," Journal of Health Economics, Elsevier, vol. 32(6), pages 1130-1141.
    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. 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.
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    Cited by:

    1. Nelson, Jon P. & McNall, Amy D., 2016. "Alcohol prices, taxes, and alcohol-related harms: A critical review of natural experiments in alcohol policy for nine countries," Health Policy, Elsevier, vol. 120(3), pages 264-272.
    2. David S. Jacks & Krishna Pendakur & Hitoshi Shigeoka, 2017. "Infant Mortality and the Repeal of Federal Prohibition," Working Papers 2017-036, Human Capital and Economic Opportunity Working Group.
    3. Colin P. Green & Maria Navarro Paniagua, 2016. "Play Hard, Shirk Hard? The Effect of Bar Hours Regulation on Worker Absence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(2), pages 248-264, April.

    More about this item


    alcohol taxes; health effects of alcohol; cross-border shopping;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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