Tourism and income inequality

Abstract

Purpose – Tourism has grown to be one of the world's largest and fastest-growing economic industries. Tourism development is viewed as a tool to improve income distribution as it allows people at the bottom of the pyramid to get involved in the industry. This study aims to examine the impact of tourism on income inequality in the top income equality countries. Design/methodology/approach – The paper employs fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares techniques to investigate the dynamic impact of tourism on income inequality in the world's most income equality countries, from 2001 to 2016. Findings – The result shows that tourism is one of the major drivers of income equality. Thus, tourism can be used to reduce a country's income disparity. Practical implications – As a result, policymakers should support the tourism industry to reduce income disparity and enhance income distribution. Originality/value – Given the conflicting findings in the literature, this study reexamines this link and attempts to backwardly assess if the top equal-income countries in the world are heavily dependent on tourism.

Keywords

• Tourism
• Income inequality
• Panel dynamic model
• Fully modified ordinary least squares (FMOLS)
• Dynamic ordinary least squares (DOLS)