Landmarked Inequality: The Effect of Tourism on Wealth Inequality

• In Event: 30852 - Wealth

Abstract

Tourism is one of the largest and fastest-growing industries, accounting for over 10% of jobs and the global GDP in 2019 (World Travel & Tourism Council 2024; World Travel Market 2024). Yet, there is limited research on how tourism impacts wealth inequality ­– potentially through rising housing costs, unequal access to self-employment and investment opportunities, and the government subsidization of wealthy investors and business owners to promote tourism. This project examines the relationship between tourism and wealth inequality by answering the following research questions: 1) Is increased tourism associated with a change in wealth inequality in a given country? 2) Does more tourism cause greater wealth inequality within a country? To analyze the correlation between tourism and wealth inequality, this study will use 2002-2019 panel data from 142 sovereign countries from the World Bank and World Inequality Database employing fixed effects modeling. Then, to causally estimate the impact of tourism on wealth inequality, the study will employ an instrumental variable approach using the development of a new UNESCO World Heritage Site as an instrument for tourism. The primary objectives of this research are to understand tourism’s economic impact on wealth inequality and test its causal relationship using a unique instrumental variable approach. This project advances broader discussions of wealth inequality, global wealth redistribution, and the impacts of the service sector, particularly tourism, on economic inequality. 

Author

• Jennifer Butler, Princeton University