The Influence of Tourism on Income Inequality

Abstract

This article examines the influence of tourism on income inequality on a global sample. Our analysis uses various econometric techniques for panel data including 97 countries over the period 2002–2014 categorized into three subsamples: 30 low- and lower-middle-income economies (LMEs), 25 upper-middle-income economies (UMEs), and 42 high-income economies (HIEs). Our empirical findings are interesting. First, both domestic and international tourism reduce income inequality whereas a better institutional quality increases the income inequality. Our findings also clearly indicate that international tourism contributes to the reduction of income inequalities while the national tourism requires an institutional adjustment in the LMEs and the UMEs to do so. This observation highlights the important roles of tax and transfer policies in fighting against income inequality.

Trade openness, FDI, and income inequality: Evidence from sub‐Saharan Africa

“…Moreover, the finding shows that there is a positive relationship between political stability and inequality, meaning that political stability contributes to increased inequality in the region. The result confirms the position of Nguyen et al (2020) who conclude that a better institution may increase income inequality. Furthermore, rule of law and corruption contribute to increase inequality.…”

“…In line with the standard inequality literature, we use the Gini coefficient to measure the inequality variable (Fang et al, 2020; Folarin & Adeniyi, 2019; Fosu, 2015; Kaulihowa & Adjasi, 2018; Nguyen et al, 2020; Tchamyou et al, 2019a, 2019b). As argued by Fang et al (2020), the Gini coefficient is the best indicator—it is calculated based on the disposable income of the selected countries.…”

Tourism, job vulnerability and income inequality during the COVID-19 pandemic: A global perspective

“…Among these 330 million positions that are linked to tourism directly and indirectly, 54% are offered to women ( UNWTO, 2019 ), 10–34% are available to youth ( WTTC, 2019 ), and many are undertaken by low-income families. By supporting these economically vulnerable groups with fair wages and decent jobs, tourism plays a significant role in reducing income inequality and absolute poverty ($1.90 a day), especially for developing and less developed countries ( Li, Chen, Li, & Goh, 2016 ; Llorca-Rodríguez, García-Fernández, & Casas-Jurado, 2020 ; Medina-Muñoz, Medina-Muñoz, & Gutiérrez-Pérez, 2015 ; Nguyen, Schinckus, Su, & Chong, 2020 ). With the collapse of tourism demand during the COVID-19 period, the traditional opportunities provided to economically vulnerable groups are substantially diminishing.…”

Towards the quest to reduce income inequality in Africa: is there a synergy between tourism development and governance?

“…First, the inflow of foreign direct investment (FDI) to Africa, which is a key component of trade openness and driver of socioeconomic opportunities is low (US$ 46 billion) compared to Latin America (US$ 137 billion) and Asia ($500 billion). Second, with export diversification in Africa low, and FDI flowing into largely into the hydrocarbon, aviation, transportation, telecommunication, and extraction subsectors(Nguyen et al, 2021;Anyanwu, 2014), trade openness could contribute to the heightening of Africa's income inequality gap. This finding aligns withCabral et al (2016) who provided convincing evidence from the similar estimation technique that trade openness disequalises incomes in 15 countries.…”