Productivity growth and income in the tourism sector: Role of tourism demand and human capital investment

Peter Stauvermann and Ronald Kumar

Tourism Management, 2017, vol. 61, issue C, 426-433

Abstract: This paper proposes a model for the demand for tourism in the context of a developing country. The parameters of the model are a tourist sector characterised by monopolistic competition, where human capital is the main factor of production and hotels have market power. Additionally land use is marked by demand from both agricultural and tourism sectors. From the household side, a simplified OLG approach is developed to consider consumption, human activity and the number of children. A dynamic framework is therefore identified to investigate the long-run consequences of increasing labor productivity and lowering the fertility rate. If the supply-side policy leads to economic growth, the tourism led growth hypothesis is theoretically confirmed. It is concluded that an increase in labor productivity generates positive growth effects only if the demand for tourism is elastic, otherwise negative results arise.

Keywords: Elasticity; Human capital investment; OLG model; Productivity growth; Tourism demand; Developing countries (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:touman:v:61:y:2017:i:c:p:426-433

DOI: 10.1016/j.tourman.2017.03.006

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