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Tourism, Jobs, Capital Accumulation and the Economy: A Dynamic Analysis

Author

Listed:
  • Pasquale M. Sgro

    (Deakin University)

  • Chi-Chur Chao

    (Deakin University and Chinese University of Hong Kong)

  • Bharat R. Hazari

    (Deakin University and CEPREMAP)

  • Jean-Pierre Laffargue

    (CEPREMAP)

  • Eden S. H. Yu

    (City University of Hong Kong)

Abstract

This paper examines the effects of tourism in a dynamic model of trade on unemployment, capital accumulation and resident welfare. A tourism boom improves the terms of trade, increases labor employment, but lowers capital accumulation. The reduction in the capital stock depends on the degree of factor intensity. When the traded sector is weakly capital intensive, the expansion of tourism improves welfare. However, when the traded sector is strongly capital intensive, the fall in capital can be a dominant factor in lowering national welfare. This dynamic immiserizing result of tourism on resident welfare is confirmed by simulations on German data.

Suggested Citation

  • Pasquale M. Sgro & Chi-Chur Chao & Bharat R. Hazari & Jean-Pierre Laffargue & Eden S. H. Yu, 2005. "Tourism, Jobs, Capital Accumulation and the Economy: A Dynamic Analysis," Working Papers 2005.136, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2005.136
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    Cited by:

    1. Cristina Santos & Alexandre Almeida & Aurora A.C. Teixeira, 2008. "Searching for clusters in tourism. A quantitative methodological proposal," FEP Working Papers 293, Universidade do Porto, Faculdade de Economia do Porto.
    2. Schubert, Stefan Franz, 2009. "Coping with Externalities in Tourism - A Dynamic Optimal Taxation Approach," MPRA Paper 16736, University Library of Munich, Germany.
    3. Juan Gabriel Brida & Silvia London & Mara Rojas, 2013. "A Dynamic Model of Tourism and Economic Growth: the Role of Physical and Human Capital," Economics Bulletin, AccessEcon, vol. 33(2), pages 1361-1373.
    4. Schubert, Stefan Franz & Brida, Juan Gabriel, 2008. "The Dynamic Effects of Subsidizing the Tourism Sector," MPRA Paper 16755, University Library of Munich, Germany.
    5. Chi-Chur Chao & Pasquale M. Sgro, 2008. "Environmental Control, Wage Inequality and National Welfare for a Tourism Economy," Working Papers 78, Sapienza University of Rome, CIDEI.
    6. Schubert, Stefan Franz & Brida, Juan Gabriel, 2009. "A Dynamic Model of Economic Growth in a Small Tourism Driven Economy," MPRA Paper 16737, University Library of Munich, Germany.

    More about this item

    Keywords

    Tourism; Employment; Capital accumulation; Welfare;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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