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Do Changes In Cigarette Taxes Impact Youth Smoking? Evidence from Canadian Provinces

Recent U.S. studies report much smaller youth smoking participation elasticities compared to research based on 1980s and 1990s data. We exploit the considerable time-series variation available within and across Canadian provinces. In particular, we study the dramatic (50%) reduction in cigarette excise taxes that occurred in February 1994 in most eastern provinces in Canada as well as significant increases within most provinces between 1994 and 2006. OLS and logit estimates from a variety of surveys suggest participation elasticities from 0.1 to 0.3 for teens aged 15 to 19 years, which are lower than traditional estimates. However, children aged 10 to 14 are significantly more tax elastic than older peers, with participation elasticities between -1.5 and -2. Finally, employing different sub-samples, we find that sharp hikes and reductions generate similar cigarette tax elasticities.