The effects of the Chilean food package policy on aggregate employment and real wages

Authors: Guillermo Paraje / Arantxa Colchero / Juan Marcos Wlasiuk / Antonio Martner Sota / Barry M. Popkin

January 2021 – In 2016 the Chilean government instituted the world’s most aggressive food policy package to prevent obesity and nutrition-related noncommunicable diseases. The package included comprehensive integrated policies on child marketing, school-related controls, and front-of-package warning labels for foods and beverages high in saturated fats, sugars, calories, and/or salt. This study assesses the impact of these policies on labor market outcomes (real wages and aggregate employment) after 18 months. Our results show that aggregate employment and average real wages were not affected by these regulations when compared to sectors unlikely to be affected by the policies. The study finds that sectors in which products are subject to labeling may have seen a decline in production but show no reduction in employment on aggregate. These results are consistent with evidence from research on the influence of other types of regulations (for example, how taxes on sugar-sweetened beverages affect employment) in other countries and cast doubts on the concerns that firms commonly raise about the negative impact of such regulations on labor market outcomes.