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A Dynamic Model of Tourism, Employment and Welfare: The Case of Hong Kong

Author

Listed:
  • Chi-Chur Chao

    (CUHK - The Chinese University of Hong Kong)

  • Bharat R. Hazari

    (CUHK - City University of Hong Kong [Hong Kong])

  • Jean-Pierre Laffargue

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Eden S. H. Yu

    (CUHK - City University of Hong Kong [Hong Kong])

Abstract

The present paper uses a dynamic open-economy model with wage indexation to examine the impact of tourism on employment and welfare. Both short-run and long-run situations are analysed. It is well known that tourism converts non-traded goods into tradable goods. An increase in the demand for a non-traded good raises its relative price, which results in an expansion of the non-traded sector at the expense of the traded goods sector. This output shift raises labour employment in the short run. However, in the long run, the higher relative price leads to higher wages, resulting in a negative impact on labour employment. If the output effect is dominant, the expansion in tourism raises employment and welfare. However, under realistic conditions tourism may lower both labour employment and welfare due to rising costs. These results are demonstrated by simulating a dynamic model for the case of Hong Kong.

Suggested Citation

  • Chi-Chur Chao & Bharat R. Hazari & Jean-Pierre Laffargue & Eden S. H. Yu, 2009. "A Dynamic Model of Tourism, Employment and Welfare: The Case of Hong Kong," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00310514, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00310514
    DOI: 10.1111/j.1468-0106.2009.00441.x
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    Cited by:

    1. Muhammad Shahbaz & Ramzi Benkraiem & Anthony Miloudi & Aviral Kumar Tiwari, 2019. "Tourism-induced financial development in Malaysia: New evidence from the tourism development index," Tourism Economics, , vol. 25(5), pages 757-778, August.
    2. Wei-Bin Zhang, 2015. "Tourism, Trade, Externalities, And Public Goods In A Three-Sector Growth Model," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 6(1), pages 1-19.
    3. Wei-Bin Zhang, 2017. "Education and Tourism in a Small Open Growth Economy," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(11), pages 643-666, November.
    4. Wei-Bin ZHANG, 2015. "Tourism, Trade And Wealth Accumulation With Endogenous Income And Wealth Distribution Among Countries," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 4(1), pages 1-1, January.
    5. Mingzhi Xiao & Takara Sakai & Daisuke Murakami & Yuki Takayama, 2025. "When Does Tourism Raise Land Prices? Threshold Effects, Superstar Cities, and Policy Lessons from Japan," Papers 2509.04307, arXiv.org.
    6. Zhang Wei-Bin, 2020. "Economic Development and International and Interregional Tourism," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 13(4), pages 375-387, December.
    7. Neslihan Onur & Ayse Celik Yetim & Yigit Guven & Ebru Gozen & Derya Ozilhan Ozbey & Gul Coskun Degirmen, 2024. "Employer Brand Attractiveness and Organizational Commitment: The Moderating Role of Organizational Support," Sustainability, MDPI, vol. 16(13), pages 1-23, June.
    8. Wei-Bin ZHANG, 2016. "Tourism and economic structural change with endogenous wealth and human capital and elastic labor supply," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 103-126, Winter.
    9. Zhang Wei-Bin, 2017. "A Multi-Country Trade and Tourism with Endogenous Capital and Knowledge," Business Systems Research, Sciendo, vol. 8(1), pages 71-91, March.
    10. Ladson Pires Andrade & Hassane Mahamad Velonjara, 2020. "The Impact of Tourism on Economic Growth: A Panel Co-integration from the Community of Portuguese-speaking Countries (CPLP)," Business and Economic Research, Macrothink Institute, vol. 10(3), pages 281-291, September.
    11. Wei-Bin ZHANG, 2016. "Tourism and economic structural change with endogenous wealth and human capital and elastic labor supply," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(609), W), pages 103-126, Winter.
    12. Wei-Bin Zhang, 2017. "Spatial Agglomeration And Economic Development With The Inclusion Of Interregional Tourism," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 62(213), pages 93-128, April - J.
    13. Amin Sokhanvar & Glenn P. Jenkins, 2021. "An Efficient Long-Run Economic Growth Strategy for Estonia," Development Discussion Papers 2020-23, JDI Executive Programs.
    14. Chou, Ming Che, 2013. "Does tourism development promote economic growth in transition countries? A panel data analysis," Economic Modelling, Elsevier, vol. 33(C), pages 226-232.

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