Tourism and income distribution: Evidence from a developed regional economy

The ways in which tourism consumption affects income distribution involves three channels: changes in prices, earnings of households and government revenues. In this paper, we focus our analysis on the latter two channels through a social accounting matrix (SAM) model of Galicia for the year 2008. This SAM, which is elaborated with a special design for the evaluation of tourism policies, incorporates data for a wide variety of households (eight different types disaggregated by level of income), two governments (regional and central), four types of taxes, four wage earners (classified by education skill) and 29 sectors, among other figures. Furthermore, with the purpose of going deeper into the distributive effects, the traditional multiplicative and additive SAM multiplier decompositions are presented. Results show that the positive effects on all income groups are significant. However, high-income households benefit more than low income ones, contributing to a slight increase in income inequality within the region.