Essays in health and labor economics

This dissertation focuses on how changes in public policies have the ability to affect the consumption and nutrition of consumers through changes in product prices and quality. In the first chapter, I examine price pass-through and changes in quality at restaurants in response to an increase in minimum wage. In the second chapter, I examine changes in prices among retailers and restaurants in response to the largest tax on sugar sweetened beverages in the U.S. In the third chapter, I examine changes in nutrition and the labor market effects on the aging population in response to bans on trans fatty acids in food away from home establishments.

In the first chapter, I investigate the responses of the restaurant industry to increases in the minimum wage. I construct a novel panel dataset based on online restaurant menus that allows me to analyze a full suite of potential margins of response including prices, quality, the number and types of items offered, hours of operation, and exit. I find that prices rise 0.3% to 0.8% in response to a 10% increase in the minimum wage. These results are consistent with previous estimates in the literature, as well as what is predicted by the textbook model of competitive factor markets and monopolistically competitive firms. Building on this, I then extend the literature to more broadly understand the price pass-through as well as provide the first estimates of responses on quality. I find heterogeneity in pass through across restaurant characteristics, with higher pass-through among small firms, and lower pass-through for restaurants near the border of a minimum wage policy region. At the menu item level, pass-through is higher for specific types of items, such as sandwiches, and options with organic or gluten-free ingredients. In contrast, I find no evidence of higher pass-through for popular items. Further, I find significant changes in restaurant quality due to an increase in minimum wage. Specifically, I find that for low quality restaurants, quality decreases after an increase in minimum wage, but that quality increases for high quality restaurants. These quality results are driven more so by changes in service quality than by changes in food quality. Finally, I find no evidence that restaurants systematically change the number or types of items offered, nor hours of business in response to an increase in the minimum wage. Restaurants are, however, significantly more likely to exit due to an increase in minimum wage.

In Chapter 2, we estimate the incidence of a relatively new type of excise tax, a tax on sugar-sweetened beverages (SSBs). We examine the largest such tax to date, which is two cents per ounce, implemented in Boulder, CO on July 1, 2017. As in other communities, Boulder levies this tax on distributors. This paper estimates the extent to which this tax on distributors is passed through to consumers in the form of higher retail prices. To do so, we examine how the retail prices of SSBs changed after the tax in Boulder relative to a control community, using hand-collected data from retailers and internet data of restaurant menus. We find that 50.9% of the tax was passed through to retail prices 5-7 weeks after the implementation of the tax. Some retailers add the tax only at the register, indicating that estimates solely from posted prices would result in an underestimate of pass-through. Including the taxes that were charged at the register, we find that 78.9 % of the tax was passed through to consumers.

In Chapter 3, I add to the growing literature on the relationship between health status and labor market outcomes by providing estimates of how a ban on the use of trans fatty acids in food away from home establishments, a nutrition based health shock, affected labor market outcomes for the aging population. I estimate that four and more years after implementation of a trans fat ban, the percent of those employed increases by 3.4 percentage points, and that average hours worked per week increases by 1.5 hours. In addition, I find that these increases are driven by a decrease in the percent of people unable to work, not by a decrease in retirement. Further, I find evidence that a decrease in cardiovascular disease incidences is the driving health mechanism behind these labor market effects.