The Effect of Florida's Sales Tax Repeal on the Price of Menstrual Hygiene Products: Using Synthetic Control Methods

Abstract

This paper investigates the effect of the 2018 repeal of 6% sales tax on menstrual hygiene products price in Florida using detailed purchase data and the synthetic control method. I find that the price per one menstrual hygiene product (a tampon or a pad) dropped in Florida after the repeal, and the magnitude of the price drop was larger for the low-income than for the high-income consumers. These price reductions amount to 6.7% and 4.7% of the pre-repeal prices for each income group, respectively. The changes in prices were significant at conventional statistical significance level and were robust to the change in study design. The difference in price drop magnitude possibly stems from the fact that the two income groups use different products, and retailers price-discriminate against different income groups. While the low-income buys more store brand products which are cheaper than national brand counterparts, the high-income buys more of national brand products.

Keywords: Comparative case studies, Synthetic control methods, Sales tax, Menstrual Hygiene products

JEL Classification: H22, L10, L51