Front-of-Pack Labeling in Chile: Effects on Employment, Real Wages, and Firms' Profits after Three Years of Its Implementation.

Guillermo Paraje,Daniela Montes De Oca,Mario Canales,Juan Marcos Wlasiuk,Barry M Popkin

doi:10.3390/nu14020295

Guillermo Paraje, Daniela Montes De Oca + Show 3 more

Open Access

https://doi.org/10.3390/nu14020295

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Abstract

This study evaluates the impact of Chile’s innovative law on Food Labeling and Advertising, enacted in June 2016, on employment and real wages and profit margins for the food and beverage manufacturing sectors in the 2016–2019 period, using unique company-specific monthly data from Chile’s tax collection agency (measuring aggregate employment, real wages, average size of firms, and gross profit margins of the food and beverage manufacturing sector). Interrupted-time series analyses (ITSA) on administrative data from tax-paying firms was used and compared to synthetic control groups of sectors not affected by the regulations. ITSA results show no effect on aggregate employment nor on the average size of the firms, while they show negligible effects on real wages and gross margin of profits (as proportion of total sales), after the first two stages of the implementation (36 months), despite significant decreases in consumption in certain categories (sugar-sweetened beverages, breakfast cereals, etc.). Despite the large declines found in purchases of unhealthy foods, employment did not change and impacts on other economic outcomes were small. Though Chile’s law, is peculiar there is no reason to believe that if similar regulations were adopted elsewhere, they would have different results.

Highlights

Chile developed a coordinated comprehensive set of policies to significantly reduce ultra-processed food (UPF) consumption and a nutrient profile model to unite all policies [1,2]
The purpose of this study is to build upon this evidence and to assess the impact of both the first (July 2016) and second stages (July 2018 to June 2019) of the implementation of Chile’s Law 20606 on the aggregate employment, the real wages, the average size of firms and the gross margin of profits of the food and beverage manufacturing sector
Aggregate employment in the food and beverage sector increased from an average of 184,971 workers in the pre-intervention period to an average of 209,663 workers during the second intervention period

Summary

Introduction

Chile developed a coordinated comprehensive set of policies to significantly reduce ultra-processed food (UPF) consumption and a nutrient profile model to unite all policies [1,2]. Planners first created the model to delineate products with excessive nutrient content, or that were high in added sugar, added saturated fat, or added sodium, and whether any of those additions contributed to higher energy density of foods [3]. Chile was the first country to implement a mandatory national front-of-pack (FOP) nutrient warning label policy, followed by Peru, Uruguay, Israel, Mexico, and Argentina. Chile’s food marketing policies are worth special consideration as these are the most comprehensive of any country to date [4]. The law prohibits marketing high-in (sugar, fat, sodium) products to children under 14 years of age or marketing with themes or promotional strategies that appeal to children regardless of audience, media, or location

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