Llorenç Pou

Micro-economic determinants of the probability of tourism consumption.

This paper analyses the factors involved in the decision to consume tourism services for leisure purposes. A discrete choice logit model is used, with data drawn from the Spanish Family Expenditure Survey for the period 1985–96. The results suggest that limitations on free time, cultural factors, income (with an income elasticity below one), age and the generation effect are all crucial determining factors in the probability of travel. The use of micro data leads to the detection of a high degree of heterogeneity, both among households and in the different degree to which the aforementioned variables affect travel decisions.

Research Note: Tourism Expenditure and all-Inclusive Packages – the case of a Mature Mediterranean Destination

Nowadays, all-inclusive packages represent one of the top holiday choices for tourists visiting mature Mediterranean sun-and-sand destinations. Compared to other types of board, all-inclusive packages suppose a change in the way tourists purchase services. This research note analyses the changing patterns of expenditure caused by all-inclusive packages. For that purpose, an empirical analysis is applied to the case of the Balearic Islands, one of the leading Mediterranean destinations. The main findings are twofold: first, compared to other types of board, all-inclusive packages lead to a reduction in the destinations revenue from tourism. Second, all-inclusive packages are causing a significant change in the distribution of tourist expenditure among economic agents. In particular, compared to other types of board, spending in the country of origin is higher for all-inclusive tourists, while spending in the destination is substantially lower.

Participation in Tourism Consumption and the Intensity of Participation: An Analysis of Their Socio-Demographic and Economic Determinants

Unlike other goods, tourism services are not consumed by a significant percentage of households. Thus, knowledge of aggregate tourism demand hinges on the determinants of corner solutions at the microeconomic level. Furthermore, with regard to those households that consume tourism, their travel frequency patterns in the year need not be the same. This paper uses household microdata to examine the socio-demographic and economic determinants of both decisions: holiday participation and the intensity of participation in the year conditional on participation. The results highlight the relevance in tourism demand analyses of distinguishing between both decisions. In fact, many socio-demographic variables show only explanatory power for the participation decision. The two key factors in explaining both decisions are the previous years tourism participation pattern, suggesting evidence of habit persistence, and income, although with an income elasticity below unity.

Further evidence of excess sensitivity of consumption? Nonseparability among goods and heterogeneity across households

The standard theoretical framework for analysing households’ intertemporal decisions is the life-cycle/permanent income model. Among its implications, testing the model allows to analyse the response of consumption to fiscal policy. However, the empirical literature with microdata has yielded mixed results. This article examines the sensitivity of the results to the assumption of separability among goods and of homogeneity across households. For that purpose, we test a rational expectations permanent income model with household data drawn from the Spanish Family Expenditure Survey. This survey contains detailed information on total expenditure and the income presents large, exogenous quarterly changes due to an institutional feature. The article shows that assuming separability among commodities biases the test against the model. When separability is not imposed, we show that the rejection of the model depends on heterogeneity across households in terms of their members being unemployed or not. For those households permanently employed, the model cannot be rejected whatever their income status.

US household tourism expenditure and the Great Recession An analysis with the Consumer Expenditure Survey

The Great Recession, which started in late 2007, has been the deepest, longest lasting economic recession since the 1930s. This article examines US household tourism expenditure patterns over the last business cycle. For this purpose, microdata drawn from the Consumer Expenditure Survey for the period 2005–2012 are analyzed. The availability of a survey covering such a long period enables the authors to test whether the determinants of (and their effect on) tourism spending have changed since the economic downturn. By applying a Heckman model, the article also examines the sensitivity of income elasticity estimates to the chosen income measure (current vs. permanent income).

High unemployment and tourism participation

ABSTRACT This paper analyses individual tourism participation decisions during a worldwide economic downturn. Given the nature of tourism services, a reduction in habitual consumption is highly probable during an economic crisis. Since the unemployment rate is strongly correlated with the economic cycle, the hypothesis that is discussed concerns whether residents’ decision to participate in tourism is affected by their regions level of unemployment. More specifically, it is suggested that unemployment not only affects the tourism participation decision of those who are out-of-work, but that aggregate unemployment (measured as the regions unemployment rate) also has a bearing on such decisions made by individuals in general. The results that were obtained for a set of EU countries show that the unemployment level has a positive effect on the probability of not going on holidays. This effect emerges when there is an unemployment rate of over 10%.

Consumption, unemployment and the Great Recession: Does it matter who is unemployed and for how long?

Purpose - – The purpose of this paper is to test whether households with members that experience job loss shocks are able to protect their previous level of consumption. The paper also tests whether consumption protection is affected when spells persist through time. Design/methodology/approach - – The paper estimates an intertemporal consumption model, where households try to smooth their marginal utility over time. For that purpose it analyses Spanish household budget surveys that span a long period, 1999-2012, including the Great Recession. Unlike most consumption datasets, this microdata is designed as a panel and provides detailed information for all consumption categories as well as household members’ labour status. Findings - – The paper finds that consumption smoothing is dependent on the household member facing the unemployment transition. In particular, only main breadwinner’s unemployment transitions affects consumption smoothing. It also shows that the consumption drop persists beyond the period of the job loss for ongoing spells, although it follows a decreasing pattern. Finally, the estimation results are stable over the business cycle. Practical implications - – The results suggest that Spanish households are not capable of fully insuring against main breadwinner’s unemployment shocks. Further, the results show that this effect remains up to two years for ongoing unemployment spells. Thus these results highlight a welfare loss by Spanish households with unemployed members. Originality/value - – The paper extends the usual analysis of job loss shocks by the main breadwinner to include the cases of both the spouse and the rest of household members, who tend to account for most unemployment. Further, it tests for unemployment persistence. Finally, it checks the sensitivity of the results to the business cycle, including the Great Recession.