The impact of COVID-19 on tourism, employment, and population of the Azores islands

Abstract

Tourism is a very important economic sector and, for many regions, the main economic activity. Tourism was one of the main sectors affected by the COVID-19 pandemic. This paper aims to evaluate the impact of COVID-19 on tourism, employment, and the population of the Azores, highlighting the resilience of the different islands and the sustainability of their tourism. To do that, we estimate an economic base model for the Azores islands that relates total employment per island with performance indicators of the basic activities (hosts, milk production, fish captures, external public support, and the service of the public debt). The results show that employment on the islands was reduced by around 7% because of the reduction in tourism activities. The analyses also revealed that the western small islands of Flores and Corvo, which had fewer COVID-19 cases in 2020, increased their specialization in tourism and Terceira island showed a relative touristic attractiveness at the expense of the nearby Graciosa and São Jorge. We also estimated a model that relates employment with the population to evaluate the potential impact of job losses in the population change in the Azores. The results show the loss of jobs did not affect significantly the population movement in the short run.