ABSTRACT
Using a dynamic vector error correction model catering for dynamic, endogeneity, and causality issues, this study investigates the link between tourism development and income inequality in Mauritius using time series data for the period 1983–2016. The results show that tourism expansion has contributed towards reducing inequality in both the short run and long run. Furthermore, the results also confirm the presence of uni-causality in the tourism-inequality model. Also, inflation and unemployment are seen to increase income inequality in the long run whereas human capital reduces income inequality. The short-run results confirm the economic-driven growth hypothesis for the case of Mauritius.
