Behavioral Responses to Taxation: Cigarette Taxes and Food Stamp Take-Up

Kyle Rozema () and Nicolas Ziebarth ()

No 8907, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates a previously unexplored behavioral response to taxation: whether smokers compensate for higher cigarette taxes by enrolling in food stamps. First, we show theoretically that increases in cigarette taxes can induce food stamp take-up of non-enrolled, eligible smoking households. Then, we study the theoretical predictions empirically by exploiting between and within-household variation in food stamp enrollment from the Current Population Survey as well as data from the Consumer Expenditure Survey. The empirical evidence strongly supports the model predictions. Higher cigarette taxes increase the probability that low-income smoking households take-up food stamps.

Keywords: unintended consequences; cigarette taxes; food stamp take-up; tax pass-through rate (search for similar items in EconPapers)
JEL-codes: H21 H23 H26 H71 I18 L66 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2015-03
New Economics Papers: this item is included in nep-pbe and nep-pub
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Published - published as 'Taxing Consumption and the Take-Up of Public Assistance: The Case of Cigarette Taxes and Food Stamps' in: Journal of Law & Economics , 2017, 60 (1), 1-27.

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Related works:
Working Paper: Behavioral Responses to Taxation: Cigarette Taxes and Food Stamp Take-Up (2015)
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