The nonlinear effect of international tourism on income inequality: Testing the Kuznets curve hypothesis

Abstract

The study aims to assess the impact of international tourism on income inequality in 67 developing countries on a global scale during the period from 2005 to 2022. The Generalized Method of Moments (GMM) estimate technique is used to estimate econometric models and provide new insights. Quantitative research results indicate that tourism exerts both linear and nonlinear effects on income inequality. Thus, tourism development serves as a mechanism for reducing inequality in developing countries, following an inverted U-shaped pattern. The study's results fill the current research gap and provide a clear answer to the debates in the scientific community when considering the impact of tourism on income inequality in line with the Kuznets curve hypothesis. Furthermore, the models are categorized to examine the influence of macroeconomic factors, internal factors, and international factors on the dependent variable separately, providing a more general frame of reference when studying the relationship between tourism development and income inequality in developing countries.