The Impact of Tourism on Poverty Alleviation and Income Distribution: Evidence from Indonesia

Riyanto, Natanael W. G. Massie (), Djoni Hartono, Mohamad Revindo (), Usman, Setya A. Riyadi, Nanda Puspita and Uka Wikarya
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Riyanto: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia, Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia
Natanael W. G. Massie: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia, Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia
Djoni Hartono: Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia
Usman: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia
Setya A. Riyadi: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia
Nanda Puspita: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia
Uka Wikarya: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia, Department of Economics, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia

No 202047, LPEM FEBUI Working Papers from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: Tourism has important contribution towards Indonesia’s economy and the role tends to increase thorugh time. However, this study aims to delve deeper into how tourism can impact on poverty reduction and equal income distribution. The study employs Miyazawa’s input-output, econometrics, and micro simulation models. The results of the simulation show that without tourism activity, Indonesia’s poverty rate in 2014, 2015, and 2016 is expected to be 4% higher than the actuality. Tourism also contributes to reducing the depth of poverty from 2.04 to 1.21, as well as lessening the severity of poverty from 0.37 to 0.29 in 2016. This result is supported by econometric analysis showing that regions with tourism as a main economic activity have 1.5% to 3.4% lower poverty rate than those without. Further, domestic tourism activity offers a bigger contribution towards the lower income group when compared to their international counterparts. The implication of the findings towards policy making and tourism businesses is discussed.

Keywords: Tourism; —; Poverty; Alleviation; —; Income; Distribution; —; Indonesia (search for similar items in EconPapers)
JEL-codes: D63 I32 L83 R11 (search for similar items in EconPapers)
Date: 2020-47, Revised 2020
New Economics Papers: this item is included in nep-dev, nep-sea and nep-tur
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