Do More Tourists Promote Local Employment?

Event Date: 17 February 2021

Speaker: Libertad Gonzalez, Pompeu Fabra University

Time: 4.00-5.00pm

Abstract: We analyze the short-term impact of tourist flows on local labor markets using a novel identification strategy. We show that negative shocks in alternative international destinations have a strong positive effect on tourism flows to Spain. We propose using these shocks to instrument for changing tourist inflows across Spanish regions. We find that an exogenous increase in tourist inflows leads to more employment in the tourism industry in the short term but does not increase total employment in local economies. Total employment actually falls, especially for very young and older workers, as well as for prime-age women. The increase in employment in tourism is compensated by a fall in employment in construction and manufacturing. We conclude that transitory shocks to tourist inflows do not promote local employment, even in the short-term.

Published: 8 April 2021