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>An input-output model with varying job and income ratios for service industries: An application of the 'Doubling Tourist Arrivals Plan' in Taiwan (China).
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An input-output model with varying job and income ratios for service industries: An application of the 'Doubling Tourist Arrivals Plan' in Taiwan (China).
An Input-Output model that allows the value added components to vary with respect to capacity utilization is developed for service industries. The assumption of constant ratios of jobs and income in the standard I-O framework is tested by examining firm-level time-series data of tourist hotels in Taiwan from 1999 to 2003. A national input-output model with fixed and varying economic ratios and multipliers are established to evaluate the economic impacts of the Taiwan tourism policy, "Doubling Tourists Arrival's Plan" (DTAP), under three scenarios. Each scenario specifies distinct international visitor volume and hotel capacity, simulating alternative conditions of demand and supply of tourism activities in Taiwan.; Based on empirical data, jobs to sales ratios and personal income to sales ratios are not constant with respect to capacity utilization. Hotel businesses with higher occupancy rates or more rooms support fewer jobs per dollar of sales and allocate lower percentages of revenue to wages and salaries. A five percent increase in occupancy rates, for example, leads to a 7% decrease in jobs to sales ratios and 1.5% reduction in income to sales ratios. Given a rise in occupancy rates, the proposed I-O model generates lower type I and type II job and income multipliers.; Inbound tourism contributed 0.76% of Gross Domestic Product (GDP) and 1.10% total employment in 2001 in direct effects. Projected changes in tourism demand and hotel capacity in the DTAP policy would increase foreign receipts to Taiwan from the current US{dollar}3.5 billion in 2001 to a range of US{dollar}5.2 billion to {dollar}6.5 billion by 2008. The increased tourism would support 142∼190 thousand jobs and {dollar}1.89∼{dollar}2.51 billion personal income by 2008. The contribution of foreign receipts is expected to grow to 0.87%∼1.16% GDP by 2008, assuming a 3% national GDP growth rate in Taiwan.; Relaxing jobs and income ratios in the I-O model introduces a non-linearity between impact estimates and visitor spending. Economic impacts are determined simultaneously by final demand changes as well as the level of capacity utilization in the accommodation sector. Across three scenarios, total projected job estimates for the hotel sector differ from 12% to 30% between I-O models with fixed and varying jobs to sales ratios. Estimates for total personal income in the hotel sector, on the other hand, are more stable with differences ranging from 2% to 7%.; The assumption of linearity and constant coefficient in the production system generally leads to overestimation in the secondary effects, especially with respect to income and employment. The proposed I-O model with value added components varying with capacity utilization allows changing returns to scale, and provides more accurate assessments of jobs and personal income for service industries.
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