This paper examines the issue of how tourism affects poverty in the context of the effects of tourism on an economy as a whole and on particular sectors within it. A framework for analysing the channels through which tourism affects different households is developed, and a computable general equilibrium model of the Brazilian economy is used to examine the economic impact and distributional effects of tourism in Brazil. It is shown that the effects on all income groups are positive. The lowest income households benefit from tourism but by less than some higher income groups. Policies that could redistribute greater shares of the revenue to the poor are considered.

This paper reviews the effects of trade liberalisation on wages in developing countries, and presents new evidence for Brazil. Wages fell substantially in the traded sector after trade liberalisation, consistent with there being reduced rents as industries faced greater competition. After trade liberalisation there was an increase in the marginal returns to college education. Within the traded sector, the impact of increasing openness on wages was insignificant for those in the top two education groups but negative for lower level education groups. These findings are consistent with the hypothesis that imported technology raised the relative demand for highly skilled labour.It is widely maintained that one of the causes of the growth of wage inequality in many industrialised countries is a change in the relative demand for skilled workers (Freeman, 1995;Gottschalk and Smeeding, 1997;De Santis, 2002;Acemoglu, 2003). There is little agreement, however, about the underlying causes of the change in the structure of labour demand. Some empirical evidence shows a relationship between an increase in international trade, wage dispersion and the level of employment, which has led a number of economists to conclude that recent internationalisation of economies has contributed to the increase in the dispersion of wages and unemployment (Sachs and Shatz, 1994;Leamer, 1996;Baldwin and Cain, 2000;Haskel and Slaughter, 2001). This proposition is sustained by the theorems of Heckscher and Ohlin and Stolper and Samuelson (HO/ SS). In contrast, other economists have found that technological change, rather than trade, has had the strongest impact on the structure of labour demand, since it is labour saving, especially of less-skilled labour (Berman et al., 1994(Berman et al., , 1998Desjonqueres et al., 1999). 1 While both of these perspectives also have a bearing on the relationship between trade liberalisation and the distribution of wages in developing countries, the experience of developing countries has received much less attention than that of the industrialised world. To be consistent with the HO/SS model, it has been generally assumed that the impact of trade liberalisation in developing countries is 1 Other causes have also been advanced to explain the increase in income inequality. These include: changes in industrial structure and the decline of institutions, especially decreasing union density and bargaining power (Gosling and Machin, 1995); reductions in minimum wages (Fortin and Lemieux, 1997); and the migration of less skilled workers (Borjas et al., 1992). However, these tend to be complementary to the two main causal factors -trade and/or technology.

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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.