The Impact of Inbound Tourism Development on the Income Distribution among Households and Institutions (A Structural Path Analysis Approach)

Income generation potential of Tourism is a feature that has attracted the support of policymakers and host communities. The injection of inbound tourists’ expenditures to the destinations increases the income of households and institutions. Using the social accounting matrix of 2011, this paper evaluates the impact of the development of inbound tourism sector on the income of the households and institutions, as well as its distribution. The social accounting matrix has been altered so that it can incorporate tourism sector as one single sector next to other sectors in the production account. Moreover, the channels through which this development affects the income of households and institutions have been identified adopting structural path analysis approach. The findings show that institutions, urban households and rural households enjoy the most income increase, respectively. The four-fold share of the urban households compared to that of the rurals indicates an increase in the income gap as a result of inbound tourism development. Transportation sector has the greatest share in transferring the income-generating effects of the inbound tourism development to the households and institutions. Labor and capital are the most important factors of production in transferring inbound tourism development income to the households and institutions respectively.