The role of museums in bilateral tourist flows: evidence from Italy

This paper estimates the causal relationship of supply of art on domestic tourist flows. To this aim, we use aggregate bilateral data on tourist flows and various data on museums in the twenty Italian regions. To solve the potential endogeneity of the supply of museums, we use three different empirical strategies: we use a fixed effects model controlling for bilateral macro-area dummies, we compute the degree of selection on unobservables relative to observables which would be necessary to drive the result to zero and, finally, we adopt a two-stage least squares approach that uses a measure of historical patronage, the number of noble families, as an instrument for the number of museums. For each empirical strategy, there is strong evidence of a positive effect of the number of ‘net-museums’ on bilateral tourist flows.