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A Dynamic Model Of Tourism, Employment And Welfare: The Case Of Hong Kong

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  • Chi-Chur Chao
  • Bharat R. Hazari
  • Jean-Pierre Laffargue
  • Eden S. H. Yu

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.
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  • 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," Pacific Economic Review, Wiley Blackwell, vol. 14(2), pages 232-245, May.
    • Handle: RePEc:bla:pacecr:v:14:y:2009:i:2:p:232-245
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    File URL: http://hdl.handle.net/10.1111/j.1468-0106.2009.00441.x
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    References listed on IDEAS

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    1. Chi‐Chur Chao & Bharat R. Hazari & Jean‐Pierre Laffargue & Pasquale M. Sgro & Eden S. H. Yu, 2006. "Tourism, Dutch Disease And Welfare In An Open Dynamic Economy," The Japanese Economic Review, Japanese Economic Association, vol. 57(4), pages 501-515, December.
    2. Ronald W. Jones, 2018. "The Structure of Simple General Equilibrium Models," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 4, pages 61-84, World Scientific Publishing Co. Pte. Ltd..
    3. Richard A. Brecher, 1974. "Minimum Wage Rates and the Pure Theory of International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 88(1), pages 98-116.
    4. Chi‐Chur Chao & Bharat R. Hazari & Jean‐Pierre Laffargue & Pasquale M. Sgro & Eden S. H. Yu, 2006. "Tourism, Dutch Disease And Welfare In An Open Dynamic Economy," The Japanese Economic Review, Japanese Economic Association, vol. 57(4), pages 501-515, December.
    5. repec:bla:pacecr:v:8:y:2003:i:3:p:239-243 is not listed on IDEAS
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    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.
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    5. Zhang, Wei-Bin, 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.
    6. 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.
    7. Zhang, Wei-Bin, 2020. "Economic Development And International And Interregional Tourism," Economic and Regional Studies (Studia Ekonomiczne i Regionalne), John Paul II University of Applied Sciences in Biala Podlaska, vol. 13(4), December.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
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    13. 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.

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