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Tourism, Jobs, Capital Accumulation and the Economy: A Dynamic AnalysisChi Chur ChaoChinese University of Hong Kong - Department of Economics Bharat R. HazariCity University of Hong Kong Jean-Pierre LaffargueCEPREMAP Pasquale M. SgroDeakin University - Deakin Business School Eden S. H. YuCity University of Hong Kong - Department of Economics & Finance November 2005 FEEM Working Paper No. 136.05 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.
Number of Pages in PDF File: 35 Keywords: Tourism, employment, capital accumulation, welfare JEL Classification: O10, F11 working papers seriesDate posted: November 28, 2005Suggested CitationContact Information
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