On the long-term relationship between employment and output in the tourism sector: The case of Spain

Although tourism is widely recognized as a driver of economic growth and employment, empirical evidence comparing its employment–output relationship with other sectors remains limited. This paper analyses the long-run relationship between employment and output by estimating and comparing employment elasticities across different levels of aggregation: hospitality, aggregate tourism, and the overall economy. Focusing on Spain as a tourism-specialized economy, the study uses annual data for 1995–2022 and applies Johansen cointegration techniques within a Vector Error Correction Model framework. The results confirm long-run cointegration relationships at all three levels of analysis. Employment elasticity is close to unity in hospitality, indicating strong responsiveness of employment to output growth. At the aggregate tourism level, elasticity declines to 0.55, while for the economy as a whole it reaches 0.38, reflecting lower employment absorption in more capital-intensive activities. Overall, the findings highlight tourism—particularly hospitality—as a key contributor to long-term job creation in Spain.