Impact of Italian smoking ban on business activity of restaurants, cafès and bars

In this paper, we estimate the economic impact of the Italian smoking ban of 2005 on some activities of the catering sector. We use the quasi-experimental design induced by the introduction of the smoking ban in Italy to compare sales, profits and employment in cafès and restaurants located in the treatment area relative to a control group in similar economies such as Spain and France, where no ban had yet been imposed. We selected a large sample of firms in these three countries from a unique European panel dataset, which collects comparable financial indicators extracted from balance sheets. Our study indicates that the Italian smoking ban had a slight negative impact on sales in caf´es and restaurants but had no effect on profits, earnings or employment.