Salmaan Seraji-Bozorgzad, Wayne State University
Following the 2013 bankruptcy, Detroit has pursued a redevelopment strategy which significantly focuses on downtown tourism; however, there are concerns as to whether these investments benefit the city’s resident population or primarily serve regional consumers and the surrounding metropolitan and statistical areas. Given the economic spatial disconnect between the concentration of investment in the downtown core and the surrounding city neighborhoods, there is a risk that regional aggregate growth may overlook local disparities. This paper empirically analyzes the short-run and long-run economic impacts of downtown tourism on Detroit’s resident labor market. By specifically utilizing resident-based employment and unemployment series, the analysis isolates the labor market experiences of Detroiters. The analysis employed cointegration tests, vector autoregressive models, and error correction models. The results confirm a stable long-run equilibrium, demonstrating that resident labor market conditions are structurally linked to downtown visitation. In the short-run, hotel occupancy growth acts as a robust, uni-directional, leading indicator, predicting employment growth and unemployment decline in the following period. In contrast, monthly visitation growth functions as a significant contemporaneous driver of change in the labor market. Furthermore, the error correction models reveal that employment gains exhibit persistence while unemployment decline is immediate but short-lived without further developments. These findings validate tourism as a driver of local economic development for Detroit residents.
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