Employment and wage effects of sugar-sweetened beverage taxes and front-of-package warning label regulations on the food and beverage industry: Evidence from Peru

Abstract

Peru increased its sugar-sweetened beverage tax by 8 percentage points (from 17% to 25%) in 2018 and in 2019 imposed front-of-package warning labels on processed and ultra-processed foods and beverages high in sugar, saturated fats, and sodium or containing trans fats. We assess the pre-COVID-19 impacts of these two policies on aggregate formal employment and average wages in the food and beverage industry. In the analysis we use monthly administrative data from the Ministry of Labor in Peru for 127 manufacturing industries from January 2016 through February 2020 and pair an interrupted time series analysis with the synthetic control method. Overall we find that the sugar-sweetened beverage tax increase and the front-of-package label regulations did not result in job or wage losses. These results are consistent with outcomes from previous studies that have separately looked at the effects of sugar-sweetened beverage taxes (in the United States and Mexico) and front-of-package label regulations (in Chile). Our key contribution is that we assess the effects of both policies for the same country. Consistent with the global literature, our findings suggest that, due to industry substitutions and other actions, employment and wages were not impacted even in industries affected by both policies in a short time. The lack of job and wage losses in the Peruvian experience, the scope of the country’s policies, and the form of implementation can advise other countries engaging in similar reforms.