Economic Impact of Mexico City's Smoke-Free Law
Published in: Tobacco Control, v. 20, no. 4, July 2011, p. 273-278
Posted on RAND.org on February 03, 2011
OBJECTIVE: To evaluate the economic impact of Mexico City's 2008 smoke-free law—The Non-Smokers' 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 León and México, 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 restaurants' 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 restaurants' income, employees' 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 City's experience suggests that smoke-free laws in Mexico and elsewhere will not hurt economic productivity in the restaurant and bar industries.
This report is part of the RAND Corporation External publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.