Inter-Industry Employment Spillovers from Tourism Inflows

Abstract

How much economic stimulus does tourism provide by generating jobs in various local industry sectors? Using data across 43 U.S. metropolitan statistical areas during 1987-2006, we analyze the impact of tourism inflows - proxied by the number of hotel rooms sold - on the employment in 22 non-hotel industries. We estimate a dynamic labor demand model with inter-industry spillover effects, using various estimators including GMM-based dynamic panel methods. We find statistically and economically significant effects – an additional 100 rooms sold per day during a year in a given MSA generates between 2-5 new jobs per non-hotel industry in that area. Subsample analyses across industries indicate that construction, retail, health care, professional and technical services are among the largest beneficiaries of these spillovers.

Keywords: labor demand, spillovers, tourism, industry-linkages, dynamic panel data models

JEL Classification: J23, O4, L83, C33