The paradox of prosperity: Casino tourism, immigration, and local employment in Macau

This paper investigates the paradox of prosperity in Macau, where rapid casino-driven tourism growth has led to economic expansion but created labor market challenges. While tourism growth increases demand for labor, the local workforce often lacks the necessary skills, leading to a reliance on migrant workers. Using a structural vector autoregression (SVAR) model equipped with sign-restricted identification technique, we examine the macroeconomic impact of immigration on the local labor market in tourism-dependent economies. The findings show that while tourism growth boosts labor demand and wages, it also results in labor market segmentation, with immigrants filling low-wage roles while locals dominate high-skilled sectors. The study highlights the trade-off between economic growth and local workforce stability, emphasizing the need for targeted policies that align industrial diversification with workforce development—by investing in high-value-added sectors and attracting skilled migrant labor that complements, rather than displaces, local talent—to support inclusive and sustainable growth.