Tourism and income distribution: general equilibrium models applied to the Galician economy

Abstract

Tourism is a growing economic activity. Even in a moment of crisis like present days, different organizations estimate that the evolution of tourism variables are going to increase more than triple the estimated growth for the whole economy. In this context, it is normal that specializated literature were focused on analyzing the economic impact of tourism, more related to the studies on its quantitative aspects (impact on GVA, employment, production, taxes, etc.) and not paying much attention to the qualitative analysis. However, the relationship between income distribution and economic growth is a topic which, in one way or another, must come to light in any economic debate. In all economic processes we know that there are some people winners and others losers. Or at least ones that get more benefits than others. With tourism is not going to be different. The revenues generated in the production process in order to satisfy tourist demand is distributed throughout the economic cycle to become part of the disposable income of the resident families. But this is not distributed equitably. There are some types of households that earn more income than others. The question is: can we identify them a priori? The answer is yes. In fact, the main objective of this work is to identify these groups in the Galician context. The way to identify them is through general equilibrium models that consider the economy as a whole, allowing a dissagregation by types of households and covering the circular flow of income, completely and endogenously. It is certainly important to know the impact of tourism on income and what represents on Gross Domestic Product or Gross Value Added of the economy. But this is not enough. We consider that we must take a step further and try to know how it is distributed among the different institutional sectors.