Household level heterogeneity in the income elasticities of demand for international leisure travel

Abstract

This article deepens the understanding of household level heterogeneity of income elasticities of demand for international leisure travel. This is done through the use of Swedish household level expenditure data which together with censored quantile regression allows for estimation of income elasticities based on relative consumption levels. In addition, an analysis of how the distribution of income elasticities was affected by the 2008 financial crisis is made. Results show a great heterogeneity in the estimated income elasticities, with income elasticities being the largest for the households who consume relatively little of the good, and a small positive effect of the financial crisis on the estimated distribution of income elasticities. These results can be used by policy makers, as well as managers in the tourism industry, to predict and influence the demand of international tourism at a more detailed level. The results also go in line with theoretical predictions and give further insight in market penetration as well as an ongoing structural change in the demand for international tourism.

Keywords

censored quantile regression; heterogeneous elasticities; income elasticity; international leisure travel; international tourism

Published in

Tourism Economics
2022, volume: 28, number: 8, article number: 13548166211033406
Publisher: SAGE PUBLICATIONS LTD

SLU Authors

• Stråle, Jonathan

  • Department of Economics, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Economics

Publication identifier

• DOI: https://doi.org/10.1177/13548166211033406

Permanent link to this page (URI)

https://res.slu.se/id/publ/113231