What caused the wage changes in tourism-related industries? A demand-side analysis based on an extended input-output model

Previous studies that have explored the factors influencing wage changes in tourism have generally been confined to supply-side analysis, ignoring the impact of final demand on wage changes through the mechanism of inter-industry linkages. To this end, this study proposes a novel framework that combines input-output analysis with the logarithmic mean Divisia index method to examine wage levels and their changes in tourism-related industries and to clarify how final demand affects wage changes. The empirical results for China reveal significant wage differences among tourism-related industries, with accommodation and catering sectors consistently exhibiting a low-wage profile. In addition, the decomposition results show that the wage changes from 2002 to 2017 were mainly caused by the positive role of the total final demand effect and the negative role of the labour compensation coefficient effect. The final demand structure effect and Leontief structural effect are potential drivers of wage growth.