Racial demographics and cigarette tax shifting: evidence from scanner data

Hyunchul Kim () and Dongwon Lee ()
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Hyunchul Kim: Sungkyunkwan University
Dongwon Lee: Sungkyunkwan University

Empirical Economics, 2021, vol. 61, issue 2, No 17, 1037 pages

Abstract: Abstract This paper examines the association between racial demographics and the shifting of cigarette excise taxes to consumer prices. Using scanner data on cigarette sales from 1687 stores across 53 American cities, 2009–2011, we found that cigarette taxes are shifted significantly less to consumer prices in cities with large minority (black and Hispanic) populations. The potential for price search behavior implies that our estimates understate the magnitude of the true relationship between local racial composition and cigarette tax shifting. Our finding suggests that increasing cigarette taxes may not be an effective means of reducing cigarette consumption in high-minority areas.

Keywords: Tax shifting; Cigarette excise tax; Tax incidence; Racial and ethnic minorities; Scanner data (search for similar items in EconPapers)
JEL-codes: H22 H32 H71 J15 L66 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00181-020-01876-6

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