The Distributional Paths of Foreign Tourism Spending in Iran: Application of Structural Path Analysis

Tourism has not been a growing sector in Iran in recent decades due to political conflicts with the west. Still, there is hope that it grows after lifting the economic and monetary sanctions and may bring both political and economic stability and more foreign tourists to Iran. This paper aims to study the distributional impact of foreign tourist spending in Iran using structural path analysis (SPA) within the SAM framework. The primary databases are the 2011 SAM and foreign tourism spending in 2018. According to the SAM multiplier results, high-income groups benefit significantly from foreign tourists spending and generates more inequality between ten deciles of urban and rural household income groups. Moreover, the SPA approach results indicate that most of the paths affecting household income pass through production factors. Evaluating production factors reveal that mixed-income has a significant contributor to intermediate paths., Its share in global influence for higher-income groups is significantly greater than middle- and low-income groups. Global influence also reveals that compensation of employees for lower household income groups would be affected sharply.