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Too much of a good thing? Tourism’s dual role in poverty vulnerability

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  • Zheng, Tongtong
  • Pan, Qi

Abstract

This study investigates how tourism development affects household’s vulnerability to poverty in China, where financial instability is an increasingly pressing issue. Combining micro-level data from the 2015, 2017, and 2019 China Household Finance Survey with provincial tourism statistics, we employ a two-way fixed effects model to estimate the relationship between tourism openness and likelihood of households under poverty. We define tourism openness as the ratio of tourism revenue to regional gross domestic product. The analysis reveals a clear U-shaped relationship, wherein initial increases in tourism reduce poverty vulnerability by diversifying income sources and enhancing financial resilience, whereas excessive tourism reliance eventually facilitates substantial exposure to external shocks and heightened financial risks. Results remain robust after applying propensity score matching. Notably, regional economic development and household education significantly influence this relationship, mitigating the negative effects of high tourism dependence. The findings contribute to a comprehensive understanding of tourism’s dual role in economic development and social protection, with valuable implications for designing balanced tourism policies that support growth and household-level poverty reduction.

Suggested Citation

  • Zheng, Tongtong & Pan, Qi, 2026. "Too much of a good thing? Tourism’s dual role in poverty vulnerability," Finance Research Letters, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finlet:v:90:y:2026:i:c:s1544612325026625
    DOI: 10.1016/j.frl.2025.109413
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