Taxing consumption and the take-up of public assistance: The case of cigarette taxes and food stamps

Kyle Rozema, Nicolas R. Ziebarth

Research output: Contribution to journalArticlepeer-review

10 Scopus citations

Abstract

We exploit cigarette tax variation across US states from 2001 to 2012 to show how taxing inelastic consumption goods can induce low-income households to enroll in public assistance programs. Using a novel household panel of monthly food stamp enrollment from the Current Population Survey, we enrich standard cigarette tax difference-in-differences models with an additional control group: nonsmoking households. Smoking households are treated with higher taxes, while nonsmoking households are not. Marginal smoking households respond to increases in cigarette taxes by taking up food stamps at rates higher than smoking households in other states and nonsmoking households in the same state.

Original languageEnglish (US)
Pages (from-to)1-27
Number of pages27
JournalJournal of Law and Economics
Volume60
Issue number1
DOIs
StatePublished - Feb 2017

ASJC Scopus subject areas

  • Economics and Econometrics
  • Law

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