Title: Does tourism growth create a trickle-down effect in rural areas?

Authors: Ghozali Maski; Faishal Fadli; Vietha Devia Sagita Sumantri

Addresses: School of Economics and Business, Brawijaya University, Malang, Indonesia ' School of Economics and Business, Brawijaya University, Malang, Indonesia; School of Economics, Huazhong University of Science and Technology, Wuhan, China ' School of Economics and Business, Brawijaya University, Malang, Indonesia; School of Economics, Huazhong University of Science and Technology, Wuhan, China

Abstract: This research looks at the economic growth of the tourism sector as its growth point. Batu City has implemented the tourism sector as a growth point and has succeeded in creating very rapid economic growth and within a relatively short time. By using the error correction model, the results show that there is a positive two-way relationship between income inequality and economic growth and a negative two-way relationship between income inequality and the unemployment rate in both the long- and short-term. The economic growth of the tourism sector has resulted in a profound change in the people of Batu City from farmers to entrepreneurs (informal sector). While people who work in the informal sector are included in the figures for unemployment rate, evenly distributed income can occur because the informal sector can create jobs and absorb employment. As a result, a trickle-down effect occurred in Batu City.

Keywords: trickle-down effect; tourism; economic growth; economic development; unemployment; income inequality; error correction model; non-parametric analysis; granger causality; Indonesia.

DOI: 10.1504/IJSEM.2020.111175

International Journal of Services, Economics and Management, 2020 Vol.11 No.3, pp.191 - 220

Received: 21 Aug 2019
Accepted: 27 Mar 2020

Published online: 03 Nov 2020 *

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