A REDUCTION IN CONSUMER EXPENDITURE ON CIGARETTES AND ITS EFFECTS ON EMPLOYMENT: A CASE STUDY OF SOUTH AFRICA

Abstract

This study estimates empirically the employment effects if stronger tobacco control policies result in reduced consumption in South Africa. Since 1995, the government has committed itself to a stronger tobacco control policy and increased excise taxes. Yet policy makers are sensitive to the need to pursue this public health policy in a way that will minimize job losses. This study uses input‐output methodology and four expenditure scenarios to estimate output and employment effects following such policies. The analysis suggests that net employment effects will be positive if consumption expenditure is switched from tobacco to other goods and services in the economy. Further, this study suggests that these policy implications for tobacco control and public health hold, if a country has a self‐sufficient industry like South Africa. (JEL 118, D57)