Bharat R. Hazari

Tourism, Dutch Disease And Welfare In An Open Dynamic Economy

This paper examines the effects of an expansion in tourism on capital accumulation, sectoral output and resident welfare in an open economy with an externality in the traded good sector. An expansion of tourism increases the relative price of the nontraded good, improves the tertiary terms of trade and hence yields a gain in revenue. However, this increase in the relative price of nontraded goods results in a lowering of the demand for capital used in the traded sector. The subsequent de-industrialization in the traded good sector may lower resident welfare. This result is supported by numerical simulations.

Tourism, trade and national welfare

Volume 265 of the Contributions to Economic Analysis book series covers, among others, subject areas such as Tourism and Trade; A Two-Sector General Equilibrium Model of a Small Open Economy; Non-Traded Goods and Tourism in the Pure Theory of Trade; Tourism, Taxes and Immiserization in a Two-Country Trade Model; Price Discrimination, Tourism and Welfare; Guest Workers and Resident Immiserization; Terms of Trade and Resident Welfare; Tourism in the Generalized Harris-Todaro Model and Regional Immiserization; and Growth in a Dynamic Model of Trade.

A DYNAMIC MODEL OF TOURISM, EMPLOYMENT AND WELFARE: THE CASE OF HONG KONG

The present paper uses a dynamic open-economy model with wage indexation to examine the impact of tourism on employment and welfare. Both short-run and long-run situations are analysed. It is well known that tourism converts non-traded goods into tradable goods. An increase in the demand for a non-traded good raises its relative price, which results in an expansion of the non-traded sector at the expense of the traded goods sector. This output shift raises labour employment in the short run. However, in the long run, the higher relative price leads to higher wages, resulting in a negative impact on labour employment. If the output effect is dominant, the expansion in tourism raises employment and welfare. However, under realistic conditions tourism may lower both labour employment and welfare due to rising costs. These results are demonstrated by simulating a dynamic model for the case of Hong Kong.

Tourism, jobs, capital accumulation and the economy: A dynamic analysis

This paper examines the effects of tourism in a dynamic model of trade on unemployment, capital accumulation and resident welfare. A tourism boom improves the terms of trade, increases labor employment, but lowers capital accumulation. The reduction in the capital stock depends on the degree of factor intensity. When the traded sector is weakly capital intensive, the expansion of tourism improves welfare. However, when the traded sector is strongly capital intensive, the fall in capital can be a dominant factor in lowering national welfare. This dynamic immiserizing result of tourism on resident welfare is confirmed by simulations on German data.

Quotas, Spillovers, and the Transfer Paradox in an Economy with Tourism

This paper examines the welfare implications of quotas for an economy that is small in terms of traditionally traded goods and has monopoly power over the trade of goods consumed by tourists. Inbound tourism converts local nontraded goods into tradable goods, creating a tourism terms-of-trade effect for the tourist-receiving economy. Through this effect, quotas result in a spillover to the nontraded sector. Hence, in the presence of tourism, the traditional free-trade prescription for the small open economy is no longer valid. This lends support to the setting of import quotas. Using the optimal quota as a benchmark, we further examine the welfare effect of tied aid. If tied aid brings about an excessive supply of importable goods, then the transfer paradox of the immiserization of the tourist-receiving economy may occur.

Rising wage inequality in developing economies: Privatization and competition

Abstract Using a dual structure depicting a developing economy, this paper shows that increased partial privatization or foreign competition can lead to wage inequality between skilled and unskilled labor. In addition, rising wage inequality can be triggered by inflows of unskilled labor or outflows of skilled labor and/or capital. Further, partial privatization or foreign competition reduces the urban output, thereby raising the goods price and unemployment ratio. These effects lower social welfare of the economy.

Cheating in Contests: Anti-doping Regulatory Problems in Sport

We examine the impact of regulation on the doping decisions of athletes in a Tullock contest. The regulatory measures we consider are greater monitoring by sports authorities and a lowering of the prize in the contest. When legal efforts and illegal drugs are substitutes, an increase in anti-doping regulation may, counterintuitively, increase the levels of doping activity by athletes. Anti-doping regulation can also have the undesirable consequence of decreasing legal efforts; in our model, this always occurs when legal efforts and illegal drugs are complements, and under certain circumstances when they are substitutes.

Tourism, Employment and National Welfare

Abstract In this paper a two-sector general equilibrium model with a generalized minimum wage is presented to analyze the impact of expansion in tourism on employment and national welfare. On the basis of this model, several interesting results are obtained. First, an expansion in tourism necessarily improves the tertiary terms-of-trade. Second, and more importantly, expansion in tourism always increases employment. This is a significant result for many European countries which have rigid wage structures. Support for our results is also provided by data on employment for a selected set of European countries.

Congestion and Optimal Immigration Policy

This paper presents a model to explain the stylized fact that many countries have a low ratio of migrants in their population while some countries have a high ratio of migrants. Immigration improves the income of the domestic residents, but migrants also increase the congestion of public services. If migrants are unskilled and therefore pay low taxes, and the government does not limit access to these services, then the welfare of the domestic residents decreases with the number of migrants. Visa auctions can lower the cost of immigration control and substitute legal migrants for illegal migrants. If the government decides to limit the access of migrants to public services, immigration control becomes unnecessary and the optimal number of migrants can be very large.

Corruption, foreign aid and welfare to the poor

This paper investigates the impact of foreign aid and corruption on the welfare of different classes in an economy that receives aid and uses it to finance a public good. We use a general equilibrium model that consists of three goods and three income classes to derive our results. The most important result we obtain is to show that under certain conditions, aid and corruption immiserize the poor.