Tourism and income inequality: a sub-national within-between decomposition from Turkey

OpenAlex · English

Introduction Tourism is widely promoted as a development pathway, yet its effect on income inequality remains contested. This study examines the tourism-inequality relationship across Turkey's 26 NUTS-2 regions using a panel dataset for 2014-2024 ( N = 285). Methods Applying the Mundlak correlated random effects estimator, we decompose the nexus into within-region (temporal) and between-region (structural) components within a single model, basing inference on CR1 and CR2 small-cluster-corrected Wald tests and a wild cluster bootstrap ( B = 4,999 Rademacher draws). Results For the Gini specification, the within component is negative and marginally significant (βw = β0.0148, p = 0.082), while the between component is positive and marginally significant (βb = +0.0076, p = 0.094). The two components are statistically distinguishable under both CR1 (χ 2 = 6.92, p = 0.009) and CR2 (χ 2 = 6.43, p = 0.011) tests, and the divergence persists across per-capita, log-population, and population-density robustness checks, with WCR p-values below 0.05 across all four specifications. Discussion The within-region channel is consistent with labor-income compression, as tourism employment concentrated in lower-wage service occupations compresses the wage distribution relative to the regional baseline; the between-region channel reflects structural agglomeration, since high-tourism regions are simultaneously high-inequality regions. The nexus therefore operates through structurally opposed mechanisms at different analytical scales and cannot be captured by a single coefficient, carrying conditional implications for spatially differentiated tourism development policy.