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The Impact of Tourism on Poverty Alleviation and Income Distribution: Evidence from Indonesia

Author

Listed:
  • Riyanto

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia, Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia)

  • Natanael W. G. Massie

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia, Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia)

  • Djoni Hartono

    (Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia)

  • Mohamad D. Revindo

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia, Graduate School of Global and Strategic Studies, Universitas Indonesia, Jakarta, Indonesia)

  • Usman

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia)

  • Setya A. Riyadi

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia)

  • Nanda Puspita

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia)

  • Uka Wikarya

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia, Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia)

Abstract

Tourism has important contribution towards Indonesia’s economy and the role tends to increase thorugh time. However, this study aims to delve deeper into how tourism can impact on poverty reduction and equal income distribution. The study employs Miyazawa’s input-output, econometrics, and micro simulation models. The results of the simulation show that without tourism activity, Indonesia’s poverty rate in 2014, 2015, and 2016 is expected to be 4% higher than the actuality. Tourism also contributes to reducing the depth of poverty from 2.04 to 1.21, as well as lessening the severity of poverty from 0.37 to 0.29 in 2016. This result is supported by econometric analysis showing that regions with tourism as a main economic activity have 1.5% to 3.4% lower poverty rate than those without. Further, domestic tourism activity offers a bigger contribution towards the lower income group when compared to their international counterparts. The implication of the findings towards policy making and tourism businesses is discussed.

Suggested Citation

  • Riyanto & Natanael W. G. Massie & Djoni Hartono & Mohamad D. Revindo & Usman & Setya A. Riyadi & Nanda Puspita & Uka Wikarya, 2020. "The Impact of Tourism on Poverty Alleviation and Income Distribution: Evidence from Indonesia," LPEM FEBUI Working Papers 202047, LPEM, Faculty of Economics and Business, University of Indonesia, revised 2020.
    • Handle: RePEc:lpe:wpaper:202047
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    More about this item

    Keywords

    Tourism — Poverty Alleviation — Income Distribution — Indonesia;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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