Spatial panel data analysis of the relationship between tourism and income inequality

ABSTRACT

There remains a continuous debate in the literature regarding the effect of the tourism industry on inequality. This study examines the tourism-induced Kuznets Curve Hypothesis for 34 countries in Europe, the Balkans, and Anatolia with a fourteen-year dataset using spatial panel data analysis. Results show the validity of this hypothesis. Therefore, one can conclude that the tourism industry contributes favourably to income equality only after some threshold. Moreover, findings indicate that increases in per capita income, urbanization ratio, and total labour force participation rate led to increased inequality. Therefore, to have desirable effects of the tourism industry on inclusive growth and sustainable development, investments should consider equality of income distribution.

KEYWORDS:

• Income inequality
• inclusive growth
• kuznets curve hypothesis
• tourism development
• spatial panel data

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. https://wttc.org/en-us/Research/Economic-Impact.

2. Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.

3. This number is calculated using the data on the total contribution of the tourism and travel sector to GDP (% of GDP) for these countries and the World obtained from World Travel & Tourism Council Data Gateway (WTTC).

4. These values are based on data drawn from https://wid.world.

5. Elasticity is calculated by using the mean value.

Additional information

Notes on contributors

Gülsüm Akarsu

Gülsüm Akarsu works as a research assistant at Ondokuz Mayıs University in Samsun. She completed her PhD in Economics. Her areas of research include energy economics, tourism economics and financial economics.