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Tourism, jobs, capital accumulation and the economy: A dynamic analysis

Listed author(s):
  • Chi-Chur Chao

    (Department of Economics - Chinese University of Hong Kong - The Chinese University of Hong Kong [Hong Kong], Deakin Business School - Deakin University)

  • Bharat R. Hazari

    (Deakin Business School - Deakin University)

  • Jean-Pierre Laffargue

    (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, CEPREMAP - Centre pour la recherche économique et ses applications, UP1 - Université Panthéon-Sorbonne)

  • Pasquale M. Sgro

    (Deakin Business School - Deakin University)

  • Eden S. H. Yu

    (Department of Economics and Finance - City University of Hong Kong - CUHK - City University of Hong Kong [Hong Kong])

This paper examines the effects of tourism on labor employment, capital accumulation and resident welfare for a small open economy with unemployment. 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 fall in capital would not be so severe and the expansion of tourism improves welfare. However, when the traded sector is strongly capital intensive, the fall in capital can be a dominant factor to lower welfare. This immiserizing result of tourism on resident welfare is confirmed by the German data.

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Paper provided by HAL in its series PSE Working Papers with number halshs-00590811.

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Date of creation: Jun 2005
Handle: RePEc:hal:psewpa:halshs-00590811
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