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Tourism Demand and Wages in a General Equilibrium Model of Production

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  • Henry Thompson

    (Department of Economics, Auburn University, AL 36849, USA)

Abstract

Rising foreign income increases tourism demand and wages if tourism is labour-intensive relative to capital. This paper adds a third factor of production, skilled labour or natural resources, to delve more deeply into the potential income redistribution in general equilibrium due to rising foreign income. In a small open economy producing tourism and an import competing good, the wage may fall in spite of the expanding tourism sector if capital is a technical complement with the third factor. A model including a traditional export is also examined, as is a specific factors version of the model. The possibility of a falling wage with expanding labour-intensive tourism relates to a number of policy issues in touristic countries.

Suggested Citation

  • Henry Thompson, 2016. "Tourism Demand and Wages in a General Equilibrium Model of Production," Tourism Economics, , vol. 22(1), pages 81-91, February.
    • Handle: RePEc:sae:toueco:v:22:y:2016:i:1:p:81-91
    DOI: 10.5367/te.2014.0419
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    References listed on IDEAS

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    Cited by:

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