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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

    as
    1. Chang, Winston W, 1979. "Some Theorems of Trade and General Equilibrium with Many Goods and Factors," Econometrica, Econometric Society, vol. 47(3), pages 709-726, May.
    2. Uekawa, Yasuo & Kemp, Murray C. & Wegge, Leon L., 1973. "P- and PN-matrices, Minkowski- and Metzler- matrices, and generalizations of the Stolper- Samuelson and Samuelson-Rybczynski theorems," Journal of International Economics, Elsevier, vol. 3(1), pages 53-76, February.
    3. Michael S. Michael, 1992. "International Factor Mobility, Non-traded Goods, Tariffs, and the Terms of Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 25(2), pages 493-499, May.
    4. Ethier, Wilfred, 1974. "Some of the theorems of international trade with many goods and factors," Journal of International Economics, Elsevier, vol. 4(2), pages 199-206, May.
    5. Peter Forsyth & Larry Dwyer, 2002. "Market Power and the Taxation of Domestic and International Tourism," Tourism Economics, , vol. 8(4), pages 377-399, December.
    6. Henry Thompson, 1989. "Do Tariffs Protect Specific Factors?," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 406-412, May.
    7. Thompson, Henry, 1984. "International migration, non-traded goods and economic welfare in the source country : A comment," Journal of Development Economics, Elsevier, vol. 16(3), pages 321-324, December.
    8. Ruffin, Roy J., 1981. "Trade and factor movements with three factors and two goods," Economics Letters, Elsevier, vol. 7(2), pages 177-182.
    9. repec:bla:econom:v:41:y:1974:i:162:p:121-38 is not listed on IDEAS
    10. Hazari, Bharat R. & A-Ng, 1993. "An analysis of tourists' consumption of non-traded goods and services on the welfare of the domestic consumers," International Review of Economics & Finance, Elsevier, vol. 2(1), pages 43-58.
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    Cited by:

    1. Eleni Dimitriadou & Thomas Bournaris & Theodoros Stavrinoudis & Olga Iakovidou, 2021. "The Efficiency Score of Small Accommodation Businesses in Non-Coastal Rural Areas in Greece," Sustainability, MDPI, vol. 13(19), pages 1-15, October.

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