Shocks, recovery, and labour dynamics: Evidence from the accommodation sector

This study examines the long-term relationship between tourism demand and employment in Spain's accommodation sector during the Great Recession and the COVID-19 pandemic. Using a dynamic System GMM panel model across fifty provinces over two decades, the analysis captures employment persistence and regime-specific responses to tourism demand. Findings reveal significant employment inertia, particularly for permanent contracts, while temporary employment acts as the primary adjustment margin. Employment sensitivity to tourism demand weakened during the Great Recession but rose during COVID-19, reflecting a shift in the margin of adjustment under Spain's furlough scheme. Disaggregated results highlight pronounced heterogeneity: temporary and male employment adjust rapidly to demand shifts, while permanent and female employment adjust more gradually. Long-run results suggest that employment growth tracks sustained tourism expansion, though female employment adjusts more rigidly, possibly reflecting occupational segregation. These findings underscore the need for labour policies promoting stability and gender equity to strengthen sectoral resilience against future shocks.