The economic impact of Mexico City's smoke-free law

Objective To evaluate the economic impact of Mexico City9s 2008 smoke-free law—The Non-Smokers9 Health Protection Law on restaurants, bars and nightclubs. Material and methods We used the Monthly Services Survey of businesses from January 2005 to April 2009—with revenues, employment and payments to employees as the principal outcomes. The results are estimated using a differences-in-differences regression model with fixed effects. The states of Jalisco, Nuevo Leon and Mexico, where the law was not in effect, serve as a counterfactual comparison group. Results In restaurants, after accounting for observable factors and the fixed effects, there was a 24.8% increase in restaurants9 revenue associated with the smoke-free law. This difference is not statistically significant but shows that, on average, restaurants did not suffer economically as a result of the law. Total wages increased by 28.2% and employment increased by 16.2%. In nightclubs, bars and taverns there was a decrease of 1.5% in revenues and an increase of 0.1% and 3.0%, respectively, in wages and employment. None of these effects are statistically significant in multivariate analysis. Conclusions There is no statistically significant evidence that the Mexico City smoke-free law had a negative impact on restaurants9 income, employees9 wages and levels of employment. On the contrary, the results show a positive, though statistically non-significant, impact of the law on most of these outcomes. Mexico City9s experience suggests that smoke-free laws in Mexico and elsewhere will not hurt economic productivity in the restaurant and bar industries.