A country of waiters: The economic consequences of tourism specialization

Abstract

This paper examines the lasting impact of tourism specialization on per capita income in Spanish municipalities, aiming to understand the factors driving these effects. We employ two distinct approaches. The first one focuses on tourism development since the initial boom in the 1960s and relies on cross-sectional variation in tourism exposure related to amenities like beaches and weather for identification. The second method looks at a later wave of tourism development in the 1990s, using a shiftshare analysis that combines the share of residents from tourist-source countries in each municipality with the growth rate of tourists from these countries throughout Spain. The findings indicate that municipalities with the highest growth in tourism specialization now exhibit lower per capita income. A municipality experiencing an increase in tourism per capita over time equal to the sample median has a per capita income between 21% and 22% lower as of 2019, depending on the approach used. This decline in income is associated with an increase in temporary job contracts, with a decrease in industrial employment, and with lower levels of educational attainment.