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Tourism as a Mechanism in Reducing Income Inequality in Developing Economies

Author

Listed:
  • Dan Tan

    (Faculty of Business, University of Wollongong)

  • Risa Morimoto

    (Department of Economics, SOAS University of London)

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.

Suggested Citation

  • Dan Tan & Risa Morimoto, 2019. "Tourism as a Mechanism in Reducing Income Inequality in Developing Economies," Working Papers 230, Department of Economics, SOAS University of London, UK.
    • Handle: RePEc:soa:wpaper:230
    as

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    File URL: https://www.soas.ac.uk/sites/default/files/2022-10/economics-wp230.pdf
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    References listed on IDEAS

    as
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    5. Oechslin, Manuel & Halter, David, 2010. "Inequality and Growth: The Neglected Time Dimension," CEPR Discussion Papers 8033, C.E.P.R. Discussion Papers.
    6. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
    7. Chou, Ming Che, 2013. "Does tourism development promote economic growth in transition countries? A panel data analysis," Economic Modelling, Elsevier, vol. 33(C), pages 226-232.
    8. Nguyen, Binh T. & Albrecht, James W. & Vroman, Susan B. & Westbrook, M. Daniel, 2007. "A quantile regression decomposition of urban-rural inequality in Vietnam," Journal of Development Economics, Elsevier, vol. 83(2), pages 466-490, July.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Tourism; Developing economies; Income inequality; Income distribution; GINI coefficients; Dynamic Panel Model Approach;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • R49 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Other
    • Z32 - Other Special Topics - - Tourism Economics - - - Tourism and Development

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