Deakin University
Browse

File(s) under permanent embargo

A dynamic model of tourism, employment and welfare: the case of Hong Kong

journal contribution
posted on 2009-01-01, 00:00 authored by Chi-Chur Chao, B Hazari, J P Laffargue, S Yu
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.

History

Journal

Pacific economic review

Volume

14

Issue

2

Pagination

232 - 245

Publisher

Wiley-Blackwell Asia

Location

Melbourne, Vic.

ISSN

1361-374X

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

2009, Wiley-Blackwell

Usage metrics

    Research Publications

    Exports

    RefWorks
    BibTeX
    Ref. manager
    Endnote
    DataCite
    NLM
    DC