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

This paper estimates the causal relationship between the supply of art and tourist flows. We use aggregate bilateral data on tourist flows and on museums in the twenty Italian regions. To solve the potential endogeneity of the supply of museums we use three different empirical strategies: we control 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 2SLS approach that uses a measure of historical patronage, the number of noble families, as an instrument for the number of museums. We find strong evidence of a causal relationship between museums and tourist flows. Local supply of art helps not only attracting cultural consumers from other regions, but retaining residents who would otherwise visit other regions to consume arts. We conclude the paper with a back-of-the-envelope calculation of the economic impact (driven by tourism) of museums.