Tourism as a Mechanism in Reducing Income Inequality in Developing Economies

Dan Tan and Risa Morimoto
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Dan Tan: Faculty of Business, University of Wollongong
Risa Morimoto: Department of Economics, SOAS University of London

No 230, Working Papers from Department of Economics, SOAS University of London, UK

Abstract: Although numerous studies have investigated the contribution of tourism to economic growth and development, much less attention has been paid to assessing whether tourism-induced growth and development contribute to the poverty alleviation and income inequality (Kinyondo & Pelizzo, 2015). This study examines the statistical relationship between tourism activities and a suite of income inequality measures. Using a dynamic fixed country-level effects panel model and bootstrapped standard errors, we find strong evidence showing both tourism dollars and inbound tourism numbers have an adverse effect on income equality. These findings are supported by the results of the fixed-effects panel and dynamic pooled OLS regressions. The results of this study suggest that more effort should be exerted to develop pro-poor tourism initiatives in order to mitigate the inequitable distribution of the benefits of tourism as well as to reduce possible environmental degradation caused by rural poverty.

Keywords: Tourism; Developing economies; Income inequality; Income distribution; GINI coefficients; Dynamic Panel Model Approach (search for similar items in EconPapers)
JEL-codes: C51 R49 Z32 (search for similar items in EconPapers)
Pages: 22
Date: 2019-12
New Economics Papers: this item is included in nep-tur
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