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International Economics Seminars

Urban Welfare: Tourism in Barcelona

Rocio Madera (SMU), joint with Treb Allen (Dartmouth), Simon Fuchs (Atlanta Fed), Sharat Ganapati (Georgetown), Alberto Graziano (Caixabank Research) and Judit Montoriol-Garriga (Caixabank Research) and Urban and Regional Economics Seminars


Friday 14 May 2021 13:00 - 14:30

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About this event

We develop a simple methodology to estimate the heterogeneous welfare effects of any small shock to residents within a city. The methodology relies only on modest assumptions regarding residents’ choice of where to consume and work and delivers an expression that shows that the welfare elasticity to any small shock can be written as a function of (1) the spatial patterns of consumption and income; and (2) the price and wage effects of the shock. We then apply this methodology to ask the question: Is tourism good for locals? Using detailed spatial data on expenditure and income patterns of residents in Barcelona, we show that plausibly exogenous shifts in tourist expenditure due to compositional differences in their country of origin across time and over space in the city crowds out local expenditure by increasing prices but partially compensates through increases in wages. The incidence of the tourism shock, however, is highly heterogeneous across the city, with inner city residents bearing the largest welfare losses and peripheral residents enjoying the greatest welfare gains.