Analysing labour productivity and its economic consequences in the two Spanish tourist archipelagos

Federico Inchausti-Sintes, Ubay Pérez-Granja and José Juan Morales-Mohamed
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Federico Inchausti-Sintes: Universidad of Las Palmas de Gran Canaria, Spain
Ubay Pérez-Granja: Universidad of Las Palmas de Gran Canaria, Spain
José Juan Morales-Mohamed: Universidad of Las Palmas de Gran Canaria, Spain

Tourism Economics, 2021, vol. 27, issue 5, 1039-1059

Abstract: The analysis of productivity in tourism has mainly focused at sectoral level. However, the strong dependence on services and its impact at macroeconomic level in tourism-led economies should require a deeper analysis of productivity, especially when faced with increased cheaper competition. This article estimates a stochastic production frontier and compares the differences in labour productivity between industrial-led and tourism-led provinces in Spain. This analysis provides novel results in terms of technological changes by differentiating industrial-led province from tourism-led province. Finally, these labour productivities are introduced in a dynamic computable general equilibrium model of the two Spanish archipelagos to analyse their respective macroeconomic impact. The results show that the increase in permanent jobs in both economies leads to a convergence in labour productivity with those that are industry led. Furthermore, labour productivity gains improve competitivity against foreign destinations and enhance sectoral diversificación. However, tourism may crowd out domestic demand and investment.

Keywords: dynamic CGE models; efficiency and labour productivity; stochastic frontiers; technological change (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:27:y:2021:i:5:p:1039-1059

DOI: 10.1177/1354816620917865

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