Cross-Border Health and Productivity Effects of Alcohol Policies

29 Pages Posted: 10 Mar 2012

See all articles by Per Johansson

Per Johansson

IFAU - Institute for Labour Market Policy Evaluation; Uppsala University - Department of Economics; IZA Institute of Labor Economics

Tuomas Pekkarinen

Aalto University; Institute for the Study of Labor (IZA); VATT Institute for Economic Research

Jouko Verho

VATT Institute for Economic Research

Abstract

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.

Keywords: cross-border shopping, alcohol taxes, health effects of alcohol

JEL Classification: H23, H73, I18

Suggested Citation

Johansson, Per and Pekkarinen, Tuomas and Verho, Jouko, Cross-Border Health and Productivity Effects of Alcohol Policies. IZA Discussion Paper No. 6389, Available at SSRN: https://ssrn.com/abstract=2019441

Per Johansson (Contact Author)

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden
+ 46 18 471 70 86 (Phone)
+ 46 18 471 70 71 (Fax)

Uppsala University - Department of Economics ( email )

Uppsala, 751 20
Sweden

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tuomas Pekkarinen

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

VATT Institute for Economic Research ( email )

Jouko Verho

VATT Institute for Economic Research ( email )

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