Does Tourism Reduce Socioeconomic Inequality? Insights from the Pandemic Based on Space and Time Models for the EU

Abstract

Reducing socio-economic inequalities, particularly multidimensional poverty, remains a global challenge. The role of tourism in this context is controversial. We contribute to this debate by modelling and assessing the time and space dynamics of the link between tourism and the at risk of poverty or social exclusion (AROPE) rate. We control for effects in tourism destinations and their neighbouring regions. Both linear and non-linear relationships are considered, as well as the interaction between time effects and tourism in dynamic models. Our findings indicate that inbound tourism increases the AROPE rate and its components (income poverty and social exclusion indicators) in destinations. In contrast, domestic tourism reduces all AROPE components in both the destinations and their neighbouring regions. The effects of inbound tourism on neighbouring regions, as well as the inverted U-shape relationship between total tourism and multidimensional poverty, are found to be negligible in practice. Policy recommendations are provided.