Tourism, the environment, and welfare in a dual economy

Abstract

Tourism promotion has greater significance for developing or emerging countries, which are experiencing extensive unemployment, than for developed countries. Therefore, the spread of tourism and the accompanying introduction of foreign tourists have been top priorities in some labor-surplus developing economies. On the other hand, the destruction of the environment due to tourism promotion has been a serious problem in those countries. Thus, this paper formulates a general equilibrium model with unemployment à la Harris–Todaro and a tourism sector that generates environmental pollution. The effects of tourism promotion and a pollution tax on pollution emission, unemployment, and welfare are examined.